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Automation and technological change. 

United States. 

Washington, U. S. Govt. Print. Off., 1955. 

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AUTOMATION AND TECHNOLOGICAL CHANGE 


HEARINGS 

BEFORE THE 

SUBCOMMITTEE ON ECONOMIC STABILIZATION 

OF THE 

JOINT COMMITTEE ON THE ECONOMIC REPORT 
CONGRESS OF THE UNITED STATES 

EIGHTY-FOURTH CONGRESS 

FIRST SESSION 
PURSUANT TO 

SEC. 5 (a) OF PUBLIC LAW 304 
79TH CONGRESS 


OCTOBER 14, 15, 17, 18, 24, 25, 26, 27, AND 28, 1956 


Printed for the use of the Joint Committee on the Economic Report 













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UNIVERSITY OF MINNESOTA 



AUTOMATION AND TECHNOLOGICAL CHANGE 


HEARINGS 

BBFOBB THUS 

SUBCOMMITTEE OH ECOHQMIC STABILIZATION 

OF THE 

JOINT COMMITTEE ON THE ECONOMIC BEPORT 
CONGRESS OF THE UNITED STATES 

EIGHTY-FOURTH CONGRESS 

FIRST SESSION 

PURSUANT TO 

SEC. 5 (a) OF PUBLIC LAW 304 
79TH CONGRESS 


OCTOBER 14, 15, 17, 18, 24, 25, 26, 27, AND 28, 1955 


Printed for the use of the Joint Committee on the Economic Report 



UNITED STATES 

GOVERNMENT PRINTING OFFICE 
45006 O—59 WASHINGTON : 1955 


For sale by the Superintendent of Documents, TJ. S. Government Printing Office 
Washington 25, D. C. - Price $2.00 


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UNIVERSITY OF MINNESOTA 



JOINT COMMITTEE ON THE ECONOMIC REPORT 

(Created pursuant to sec. 5 (a) of Public Law 304,79th Cong.) 

PAUL H. DOUGLAS, Senator from Illinois, Chairman 
WRIGHT PATMAN, Representative from Texas, Vice Chairman 

HOUSE OF REPRESENTATIVES 

RICHARD BOLLING, Missouri 
WILBUR D. MILLS, Arkansas 
AUGUSTINE B. KELLEY, Pennsylvania 
JESSE P. WOLCOTT, Michigan 
HENRY O. TALLE, Iowa 
THOMAS B. CURTIS, Missouri 
Grovsb W. Enslst, Staff Director 
John W. Lehman, Clerk 


SENATE 

JOHN SPARKMAN, Alabama 
J. WILLIAM FULBRIGHT, Arkansas 
JOSEPH C. O'MAHONEY, Wyoming 
RALPH E. FLANDERS, Vermont 
ARTHUR V. WATKINS, Utah 
BARRY GOLDWATER, Arizona 


Subcommittee on Economic Stabilization 
WRIGHT PATMAN, Texas, Chairman 

JOSEPH C. O'MAHONEY, Wyoming AUGUSTINE B. KELLEY, Pennsylvania 

ARTHUR V. WATKINS, Utah JESSE P. WOLCOTT, Michigan 


n 


William H. Moobb, Economist 




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CONTENTS 


Statement of— t* 

Astin. Dr. A. V., Director, National Bureau of Standards-- 571 

Appendix- 587 

Barton, William W., president, W. F. & John Barnes Co., Rockford, 

Ill_-_-_--------- 243 

Beirne, Joseph A., president. Communications Workers of America; 
accompanied by William Dunn, assistant to the president, CWA, 

and Sylvia Gottlieb, research director, CWA- 335 

Attachments_ 350-364 

Brockwell, Harold D., and Thomas G. Dill, members of the executive 
council of the International Plate Printers, -Die Stampers, and 

Engravers Union of North America, AFL- 410 

Brunetti, Cledo, director, engineering research and development; 

accompanied by A. A. Hrevaire and W. H. G. Fitzgerald- 365 

Charts_-_-_ 389—397 

Buckingham, Walter S., Jr., associate professor, Georgia Institute of 

Technology__ 29 

Burgess, Robert W., Director, Bureau of the Census, Department of 
Commerce; accompanied by M. H. Hansen, Assistant Director for 
Statistical Standards, and James L. McPherson, machine develop¬ 
ment officer, Bureau of the Census, Department of Commerce_ 72 

Bush, Dr. Vannevar, president, Carnegie Institution of Washington. 604 
Carey, James B., secretary-treasurer, CIO, and president, Inter¬ 
national Union of Electrical Workers, accompanied by Nat Gold- 

finger, associate director of research, CIO_ 219 

Cordiner, Ralph J., president, General Electric Co.; accompanied by 
Ray H. Luebbe, vice president and general counsel, and Robert L. 

Fegley, public relations services division. 423 

Charts______ 435-443 

Coughlin, Howard, president, Office Employees’ International Union, 

AFL-_ 213 

Cross. Ralph E., executive vice president of the Cross Co_ 492 

Prepared statement_:_ 502 

Davis, D. J., vice president—manufacturing, Ford Motor Co_ 51 

Diebold, John, president, John Diebold Associates, Inc—... 6 

Elstrom, Alden, president, Alden Elstrom Associates, Minneapolis, 

Minn_ 642 

Hollengreen, M. A., president, National Machine Tool Builders 1 Asso¬ 
ciation...... 590 

Hursh, S. R., chief engineer, Pennsylvania Railroad Co_-_ 543 

International Plate Printers, Die Stampers, and Engravers Union of 

North America, AFL.......... 419 

Kennedy, W. P., president, Brotherhood of Railroad Trainmen: accom¬ 
panied by Dewey Anderson, director of the Public Affairs Institute of 

Washington, and Emil Zuklin, secretary to Mr. Kennedy_-_• 454 

McPherson, Edwin M., Lester B. Knight & Associates___ 636 

Mitchell, Don G., chairman and president, Sylvania Electric Products, 

Inc_ 169 

Mitchell, James P., Secretary of Labor; accompanied by Ewan Clague, 

Commissioner, Labor Statistics_ 262 

Mobley, M. D., executive secretary, American Vocational Association, 

Inc__- 643 

Munce, Marshall G., vice president, York Corp., York, Pa- 397 

Charts. 408-411 

n O Nance, J. J., Studebaker-Packard Corp_ 416 

P Nourse, Dr. Edwin G., former Chairman, Council of Economic Ad¬ 
visers_ 618 

• Phalen, Clifton W., president, Michigan Bell Telephone Co.; accom- 

g panied by Henry Crampton, assistant vice president_ 515 

f? Prepared statement_ 530 

Powers, Frank B., public relations consultant_ 418 

£ Pragan, Otto, director, research and chemical education, International 

a» Chemical Workers Union_ 151 

! Prepared statement-- 164 

S Reams, Clinton August, president, Reams Research A Development, 

Inc., New York, N. Y.. 421 


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rv 


CONTENTS 


Statement of—Continued 

Reuther, Walter P., president, Congress of Industrial Organizations, 
accompanied by Don Montgomery, director, Washington Office, 
United Automobile Workers of America, and Nat Goldfinger, asso¬ 
ciate director of research. CIO, Washington, D. C___ 

Snyder, John I., Jr., president and chairman of the board, United 

States Industries, Inc__._ 

Tait, Robert C., president, Stromberg-Carlson Co.; senior vice presi¬ 
dent, General Dynamics Corp_ 

Walsh, Thomas J., chemical group director, automation project: pro¬ 
fessor, chemical engineering, Case Institute of Technology, Cleve¬ 
land, Ohio_,___ 

Prepared statement_ 

Weiss, Margaret C., president, Maryland Telephone Union, Inc_ 

Additional information: 

Advertisement in Railway Age (October, 1955)_ 

Announcement and schedule of hearings_ 

Answers to questions asked of the Pennsylvania Railroad Co_ 

Automatic Manufacturing Plant—Mass Production Shop of the 

Future, reprinted from Machinery, February 1946_ 

Average number of production workers in metalworking machinery 

1927-53, and in machine tools, 1919-53-- 

Case study of a company manufacturing electric equipment (October 1955). 

Condensation of the book, Automation_ 

Electrical manufacturing employment declines, despite high level out¬ 
put 1953-55. 

Electrical machinery production and workers in the industry, com¬ 
parison. 1947-55_ 

Estimated farm population in the United States, 1910-55_ 

Growth of electronics industry, 1940-65_ 

Introduction of an electronic computer in a large insurance company 

(October 1955)--- 

Letters: 

Heberton, K. W., Western Union Telegraph Co., to chairman, 

October 27, 1955_ 

Humphrey, Hon. George M., Secretary of the Treasury, to chair¬ 
man, October 26, 1955, transmitting Treasury Department 

press release of September 23, 1955_ 

Patman, Hon. Wright, to Hon. George M. Humphrey, Secretary 

of the Treasury, October 24, 1955_ 

Phalen, C. W., president, Michigan Bell Telephone Co., to chair¬ 
man, November 9, 1955- 

Rahn, W. A., chairman, executive committee, Washington Plate 
Printers Union, local No. 2, International Plate Printers, Die 
Stampers, and Engravers Union of North America, AFL, to 

chairman, October 24, 1955_-___ 

Ruttenberg, Stanley H., director, department of education and 
research, Congress of Industrial Relations, to chairman, Novem¬ 
ber 9, 1955_ 

Notes toward an economic study of automation, by John Diebold, 

John Diebold & Associates, Inc., New York, N. Y...- 

Parts fabrication conventional or numerical_!— --— 

Production workers in machinery industries and in all manufacturing 

industries, 1899-1953_____ 

Questions asked of the Michigan Bell Telephone Co- 

Railroad industry today compared with 25 years ago__— 

Railroad work losses_,_—-- 

Ranking of durable goods manufacturing industries by 1940-50 per¬ 
cent change in employment_~--- 

Ranking of major industry groups by 1940-50, percent change in em¬ 
ployment---^-:- 

Ranking of nondurable goods manufacturing industries by 1940-50, 

percent change in employment_1---- 

Ranking of transportation industries by 1940-50, percent change in 

employment___—-- 

Section on automation taken from a report to the UAW-CIO Eco- 
nqmic and Collective Bargaining Conference, November 12, 1954.. 

State of the art of automatic data-processing machines_ 

Trends in output per man-hour and man-hours per unit of output, 
manufacturing, 1939-53_ 


Page 


97 

564 

197 


474 

488 

640 

458 

2 

560 

253 

85 

279 

14 

225 

223 

88 

181 

290 


600 


635 

271 

526 


270 


147 

10 

209 

82 

525 

469 

471 

91 

0 ? 

A 

& 

139 

587 

301 

€ 




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CONTENTS 


V 


LIST OF TABLES 

Page 

Average annual percent change in output per man-hour and man-hours per 

unit of output, manufacturing by type of index, 1939-17 and 1947-63- 814 

Average annual percent change in output per man-hour, manufacturing, 

selected periods, 1909-39_ 813 

Average annual percent increase in real private product per man-hour_ 819 

Bell System (A. T. & T. Co. and its principal telephone subsidiaries) (ex¬ 
cludes Cincinnati & Suburban and Southern New England Telephone 

Cos.)_ 868 

Change in production, physical output per man-hour and unit man-hours, 

manufacturing, durables and nondurables, 1939-47, 1947-63_ 814 

Class A telephone carrier employees—by types of workers, percent in each 

class, 1945-63_ 861 

Class A telephone carrier, overall change in employment between 1946 and 


Chemical, petroleum: 

Hours worked and income- 491 

Number of employees in relation to all manufacturing-481 

Chemical plants employees and value of manufacturing- 499 

Data used in measuring production- 321 

Data used in measuring production by industry groups- 822 

Dial conversions—Michigan- 863, 864 

Dial telephones—Bell System, 1921-64- 862 

Dial telephones, percent of—Bell System__ 862 

Durable goods manufacturing industries, ranking of, by 1940-60 percent 

change in employment- 91 

Electrical machinery production and workers in the industry, comparison 

1947-65_ 228 

Electrical manufacturing employment 1953-55_ 226 

Employment in all manufacturing and in chemical industry_ 166 

Employment in communication equipment and related products industries, 

1947-65_ 289 

Farm population in the United States, estimated, 1910-55_ 88 

Indexes of net output per man-hour, unit man-hours, production, and man¬ 
hours, manufacturing, 1939 and 1947-53_ 315 

Indexes of physical output per man-hour, unit man-hours, production, and 
man-hours, manufacturing, durable- and nondurable-goods industries, 

1939 and 1947-63_ 815 

Industrial production index- 166 

Labor force growth--- 108 

Labor turnover rates in radio, phonograph, television sets, and equipment 

industry, 1950-55- 288 

Life-insurance personnel, growth of in the United States, 1948-53___ 800 

Major industry groups, ranking of, by 1940-50 percent change In employ¬ 
ment _ 91 

Nondurable goods manufacturing industries, ranking of, by 1940-60 per¬ 
cent change in employment_ 92 

Physical output indexes of production, 1947-53, industry coverage in terms 

of 1947 production worker employment___ 821 

Production indexes, comparison of_ _L ___ 333 

Production workers, average number of, ini metalworking machinery, 1927- 

53, and in machine tools, 1919-53- 86 

Production workers in machinery industries and in all manufacturing in¬ 
dustries, 1899-53- 82 

Railroad industry today compared with 25 years ago___ 469 

Railroad job losses, estimate, 1947-55_ 471,472 

Railway payroll costs per thousand trailing gross ton-miles_ 661 

Refineries, number and capacity_ 489 

Rfinery and petroleum industry employees_ 489 

Telephone calls per operator, 1921-54_:_ 860 

Telephone calls per operator, 1921-64 (by index number, 1921=100)_ 860 

Transportation industries, ranking of, by 1940-60 percent change in em¬ 
ployment __*_ 92 

Weights used in combining products in industry indexes_ 823 

Western Electric Co. employees, 1920-54_ 858 


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VI 


CONTENTS 


LIST OF CHARTS 

Pas* 


A. T. & T. Co. share owners--- 641 

Average annual earnings, General Electric employees- 442 

Average earnings in manufacturing- 890 

Bell System employee earnings-- 640 

Bell System plant investment- 641 

Bell System shrre of national employment_ 638 

Bell System telephones, increase in_ 684 

Civilian labor force- 898 


Dial telephones, proportion of----- 632 

Electricity, home use of- 488 

Electricity, sales of in the United States_ 437 

Electricity used by average worker (annually)_ 438 

Electronic production process- 392 

Electronics industry, growth of, 1940-65- 181 

Employee compensation and benefits (General Electric)__ 442 

Employees of Bell System telephone companies____ 638 

Employed versus unemployed_____ 394 

Employment, farm and nonfarm- 408 

Employment, growth in, total, 1939-55—country—General Electric_ 441 

Employment, service industries and retail distribution_ 393 

Employment, total, in electrical industry_ 439 

Employment, total, in specific industries_ 892 

General Electric employees_ 441 

General Electric prices versus commodity prices, raw material costs, and 

employment compensation_ 439 

Gross national product_ 396 

Gross national product, trends in, 1955-75_ 182 

Jobs increase with labor-saving improvements_ 410 

Long-distance conversations_ 635 

Man-hours per unit of output, all manufacturing, 1939-63_ 313 

Mechanization partially offsets the effect of higher wage costs on price_411 

Millions of job changes every month__1_ 409 

Our growing economy_ 389 

Our growing workload_ 395 

Output per man-hour, all manufacturing, 1909-47_ 311 

Output per man-hour, all manufacturing, 1939-53_ 812 

Parts fabrication conventional or numerical_211,212 

Payments for materials and supplies (General Electric)_ 443 

Payroll of Bell System telephone companies_ 640 

Population—labor force and gross national product_ 396 

Price reductions in General Electric consumer products_ 440 

Production workers in machinery industries as percent of production 

workers in all manufacturing industries, 1899-1963_ 83 

Proportion of households with telephone service.___ 536 

Railroad job losses, estimates of, 1947-65_ 473 

Residential electricity, cost of, 1900-1964_ 436 

Residential electricity, cost of versus cost of living_ 437 

Return on equity (for owners of General Electric)_ 440 

Telephone calls per operator 1921-53_ 359 

Telephone rates in relation to other prices since 1936_ 634 

Telephones and gross national product_ 636 

Telephones and population--- 536 

Wage and salary employees___ 397 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


FRIDAY, OCTOBER 14, 1955 

Congress of the United States, 

Subcommittee on Economic Stabilization of the 

Joint Committee on the Economic Report, 

'Washington, D. G. 

The subcommittee met at 10 a. m., Hon. Wright Patman (chair¬ 
man) presiding. 

Present: Representative Wright Patman. 

Als o present: William H. Moore, staff economist; Grover W. Ensley, 
staff director; and Reed L. Frischknecht, consultant to Senator 
Watkins. 

The Chairman. The subcommittee will come to order. 

The Joint Committee on the Economic Report, in its consideration 
last winter of the President’s Economic Report, was impressed with 
the importance of continually increasing industrial productivity. The 
full committee accordingly directed this Subcommittee on Economic 
Stabilization to study the impact of so-called automation on long-run 
employment and investment levels (S. Rept. 60, 84th Cong., 1st sess., 
p. 6). Increasing productivity has provided a self-generating force 
for economic good in the past. In the interests of economic stability 
and growth, we must be alert to long-run trends and make sure that 
it continues that way, with its good features maximized and the result¬ 
ant personal and short-run hardships, if any, kept at a minimum. 

The interest which the full committee expressed last winter, and 
which prompts these hearings, has since grown by the week and month 
as the newspapers, Sunday supplements, and magazines report eyer 
new and startling developments in automation. The frequency with 
which not only the trade magazines but the mass-circulation popular 
magazines have devoted articles to this subject is striking indication 
of the public concern as to its economic and social implications. 
“Blessing” or “curse” seems to be the type of question which these 
articles seek to answer. 

The plan for the subcommittee’s study of automation and techno- 
logical change is perhaps best summarized in an announcement of 
the hearings which was issued last Monday. A copy should be inserted 
in the record at this point, to be corrected for subsequent changes in 
the schedule and order of appearances. 

1 


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2 


AUTOMATION AND TECHNOLOGICAL CHANGE 


(The information referred to is as follows:) 

( Congress of the United States 

JOINT COMMITTEE ON THE ECONOMIC REPORT SUBCOMMITTEE ON ECONOMIC 

STABILIZATION 

Heari ngs on Automation and Technological Change 

Representative Wright Patman, Democrat, of Texas, chairman of the Sub¬ 
committee on Economic Stabilization of the Joint Committee on the Economic 
Report, today released the list and time of appearances of the witnesses who will 
appear at the subcommittee hearings on automation and technological develop¬ 
ment All of the hearings will be held in room P-63, the old Supreme Court 
room in the Capitol. 

Since the Joint Committee on the Economic Report is charged under the Em¬ 
ployment Act of 1946 with the responsibility of making continuing studies of 
matters relating to employment, stability, and growth in the economy, the sub¬ 
committee is interested in such broad economic and social implications of auto¬ 
mation as (1) the extent of possible and probable displacement of personnel, 

(2) the possible shifts and distortions which may arise in the distribution of 
mass purchasing power, (3) the equitable distribution of the expected gains in 
productivity, (4) the effect upon our business structure, (5) the effect upon the 
volume and regularity of private investment. 

Using the term “automation” broadly to include various new automatic and 
electronic processes, together with rapid technological advances, the committee 
plans to develop its information primarily through a series of case studies of 
selected industries. In each of these cases, persons who have had experience 
from the standpoint of management and labor in the particular industry have 
been asked to present concrete, specific, case-study information. 

Exigencies of scheduling have in some instances made it impossible to hear all 
witnesses in respect to a given industry on the same or succeeding day. The 
accompanying schedule is accordingly presented in chronological form as well as 
in more detail form by topics and affiliations of the witnesses. 

Industrial witnesses have been asked to discuss the cost and other con¬ 
siderations which have prompted the trend toward automation in their concern 
and industry. They have been asked to discuss also the extent of labor adjust¬ 
ments which have occurred as a consequence of automation and to emphasize 
what future technology may hold in terms of investment and employment levels. 

Other questions involve the distribution within the plant of indirect and direct 
labor; what segments of .industry are susceptible to automation; how the gains 
of Increased productivity should be distributed between labor, owners, and con¬ 
sumers ; what are the requirements for new worker skills; how can the training 
and retraining problems best be handled; what are the factors which now limit 
or slow up the installation of automatic machinery; what will be the effect of 
the trend toward automation upon the relative position of large enterprises'and 
smaller local businesses? 

Spokesmen for labor have been asked to comment upon a similar set of ques¬ 
tions, emphasizing especially the impact of the automation movement upon labor, 
individually and collectively. 

Members of the Subcommittee on Economic Stabilization are as follows: 

Representative Wright Patman, Texas, chairman 

Senator Joseph 0. O’Mahoney, Wyoming Representative Augustine B. Kelley, 

Senator Arthur V. Watkins, Utah Pennsylvania 

Representative Jesse P. Wolcott, > 
Michigan 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


3 


Schedule of hearings on automation and technological change 

1. WHAT 18 AUTOMATION: GENERAL SETTING 


Name 

Position 

Date 

John Difthnld , 

Former editor, Automatic Control, 

Friday, Oct. 14,10 a. m. 

Do. 

Walter S r Buckingham, Jr 

author: Automation, the Advent of 
the Automatic Factory. 

Associate professor, Georgia Institute 
of Technology. 



2. AUTOMATION IN THE METALWORKING INDUSTRY 


D. J. Davis--._ 

Vice president, manufacturing. Ford 
Motor Co. 

President, Congress of Industrial 
Organizations. 

President, W. F. <& John Barnes Co., 
Rockford, HI. 

President, Studebaker-Packard Corp.. 

Vice president, York Corp.; chairman, 
industrial problems committee, Na¬ 
tional Association of Manufacturers, 

The Cross Co., Detroit, Mich. 

President, Landis Tool Co., Waynes¬ 
boro, Pa.; president, Gardner Ma¬ 
chine Co., Beloit, Wis. 

President and chairman of the board, 
United States Industries, Inc. 

Friday, Oct. 14, 2 p. m. 

Monday, Oct. 17,10 a. m. 

Monday, Oct. 24,10 a. m. 

Tuesday, Oct. 25, 2 p. m. 

Do. 

Wednesday, Oct. 28 2 p. m. 
Thursday, Oct. 27, 2 p. m. 

Do. 

Walter P. Reuther_ 

William W. Barton... 

James J. Nance_ 

Marshall Q. Munce._ 

Ralph E. Cross_ 

M. A. Hollengreen_ 

Jnhn T Snyder, Jr _ _ 


3. AUTOMATION IN DATA PROCESSING AND THE OFFICE 

Robert W. Burgftss 

Director, Bureau of the Census_ 

Saturday, Oct. 15,10 a. m. 
Tuesday, Oct. 18, 2 p. m. 

Wednesday, Oct. 26,10 a. m. 
Thursday, Oct. 27,2 p. m. 

Howard Coughlin._ 

President. Office Employees Inter¬ 
national Union 

President, General Electric Co_ 

Ralph J. Cordiner_ 

Allen V, Autfn 

Director, National Bureau of Stand¬ 
ards. 


4. AUTOMATION IN THE CHEMICAL INDUSTRY 

Otto Pi’ftgan . 

Research director, International 
Chemical Workers Union. 

Chemical group director, automation 
project; professor, chemical engineer¬ 
ing, Case Institute of Technology, 
Cleveland, Ohio. 

Tuesday, Oot. 18,10 a. m. 

Wednesday, Oct. 26, 2 p. m. 

Thnmas J. Walsh _ _ 


5. AUTOMATION IN THE ELECTRONICS INDUSTRY 

Don G. Mitchell___ 

President and chairman of the board, 
Sylvania Electric Products, Inc. 

President, Stromberg-Carlson divi¬ 
sion, General Dynamics Corp. 

President, International Union of 
Electrical, Radio, and Machine 
Workers. 

Director, engineering research and 
development, General Mills, Inc. 

Tuesday, Oct. 18,11 a. m. 

Tuesday, Oct. 18,2 p. m. 

Monday, Oct. 24,10 a. m. 

Tuesday, Oct. 25,10 a. m. 

Robert C. Tait_ 

James B. Carey._ 

Cledo Bmnettl -_ - - - - - 


6. AUTOMATION IN THE TRANSPORTATION INDUSTRY 

W. P. Kennedy_____ 

President, Brotherhood of Railroad 
Trainmen. 

Chief engineer, Pennsylvania Rail¬ 
road Co. 

Wednesday, Oct. 26,11 a. m. 

Thursday, Oct. 27,10 a. m. 

S. R. TTnrsh 



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4 


AUTOMATION AND TECHNOLOGICAL CHANGE 


Schedule of hearings on automation and technological change —Continued 
7. AUTOMATION IN THE COMMUNICATIONS INDUSTRY 


Name 

Position 

Date 

J. A. Belrne. 

Clifton W. Phalen. 

President, Communications Workers 
of America. 

President, Michigan Bell Telephone 
Co. 

Tuesday, Oct. 25,10 a. m. 

Thursday, Oct. 27,10 a. m. 

8. INVESTIGATIONS OF THE LABOR DEPARTMENT ON THE IMPAOT OF 

AUTOMATION 

James P. MitchelL. 

Secretary of Labor. 

Monday, Oct. 24, 2 p. m. 

0. THE PLACE OF INNOVATION AND TECHNOLOGY IN THE FREE ENTERPRISE 

SYSTEM 

VftimflVftr TRnnh 

Edwin Q. Nonrse. 

President, Carnegie Institution of 
Washington. 

Former chairman. Council of Eco¬ 
nomic Advisers. 

Friday, Oct. 28,10 a. m. 

Do. 


OBOES OF APPEABANCES 

Friday, October 14: 

10 a. m.: 

John Dlebold, former editor, Automatic Control; author, Automation, 
the Advent of the Automatic Factory. 

Walter S. Buckingham, Jr., associate professor, Georgia Institute of 
Technology. 

2 p. m.: D. J. Davis, vice president, manufacturing, Ford Motor Co. 
Saturday, October 15: 

10 a. m.: Robert W. Burgess, Director, Bureau of the Census. 

Monday, October 17: 

10 a. m.: Walter P. Reuther, president, Congress of Industrial Organizations. 
Tuesday, October 18: 

10 a. m.: 

Otto Pragan, research director. International Chemical Workers Union. 
Don G. Mitchell, president and chairman of the board, Sylvania Elec¬ 
tric Products, Inc. 

2 p. m.: 

Robert C. Tait, president, Stromberg-Carlson Division, General Dynamics 
Corp. 

Howard Coughlin, president, Office Employes International Union. 
Monday, October 24 
10 a. m.: 

James B. > ;arey, president, International Union of Electrical, Radio, 
and Machine Workers. 

William W. Barton, president, W. F. & John Barnes Co., Rockford, UL 
2 p. m.: James P. Mitchell, Secretary of Labor. 

Tuesday, October 25: 

10 a. m.: 

J. A. Belrne, president, Communications Workers of America. 

Cledo Brunetti, director, Engineering Research and Development, Gen¬ 
eral Mills, Inc. 

2 p.m.: 

James J. Nance, president, Studebaker-Packard Corp. 

Marshall G. Munce, vice president, York Corp. 

Wednesday, October 26: 

10 a. m.: Ralph J. Cordiner, president, General Electric Co. 

11 a. m.: W. P. Kennedy, president, Brotherhood of Railroad Trainmen. 

2 p. m.: 

Thomas J. Walsh, chemical group director, automation project; pro¬ 
fessor , chemical engineering, Case Institute of Technology, Cleveland, 
Ohio. 

Ralph E. Cross, the Cross Co., Detroit, Mich. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 5 

Thursday, October 27: 

10 a. m.: 

Clifton W. Phalen, president, Michigan Bell Telephone Co. 

S. BTSursh, chief engineer, Pennsylvania Railroad Co. 

2pm.: 

John I. Snyder, Jr., president and chairman of the board, U. S. Indus¬ 
tries, Inc. 

Allen V. Astin, Director, National Bureau of Standards. 

M. A. Holiengreen, president, Landis Tool Co., Waynesboro, Pa.; presi¬ 
dent, Gardner Machine Co., Beloit, Wis. 

Friday, October 28: 

10 a. m.: 

Vannevar Bush, president, Carnegie Institution of Washington. 

Edwin G. Nourse, former Chairman, Council of Economic Advisers. 

The Chairman. As pointed out in this release, the subcommittee is 
proceeding with its study largely through a series of case studies. We 
plan to cover briefly tne metal-working, data-processing, chemical, 
electronics, transportation, and communication industries. We have 
selected these industries as illustrative of the kind of problems which 
may be faced in the trend toward automation. There are, of course, 
many, many other industries which might have been studied with 
equal interest and profit had time permitted. The fact that we have 
chosen these particular industries and in most cases the associated 
unions should not for a moment obscure the fact that we also have 
rapidly advancing technology in other areas. To mention a few, one 
might cite the canning and bottling industries. One might cite pe¬ 
troleum refining, the processing of commercial bank paper work, the 
basic steel industry, the use of ready-mixed concrete, the use of elec¬ 
tronically controlled elevators in our modem skyscrapers, and many 
others. 

No study of automation would, of course, be complete without recog¬ 
nition of the important and overwhelming role which technology and 
scientific thinking play in the development of our instruments of 
defense. This defense use will always be in the background but, since 
the joint committee’s primary interest in this respect lies in civilian 
employment and the civilian segment of the economy, we shall not 
take up defense applications except in an indirect way. 

Here it may be desirable to point out for the record several changes 
which have been made in the schedule of appearances since it was 
first publicly released. 

Mr. M. A. Holiengreen of the Landis Tool Co. and Dr. A. V. Astin, 
Director of the National Bureau of Standards, will appear on the 
afternoon of October 27 instead of October 17. 

Two other witnesses experienced in the design and creation of 
metal-working and transfer equipment—Mr. William W. Barton of 
the W. F. & John Barnes Co., Rockford, Ill.—will appear on Monday, 
October 24, at the morning session; Mr. Ralph E. Cross of the Cross 
Co., Detroit, builders or special machine tools, will appear on 
October 26. 

Marshall V. Munce, vice president of the York Corp., York, Pa,, 
will appear on October 25. 

President J. M. Symes of the Pennsylvania Railroad has designated 
Mr. S. R. Hursh, chief engineer, Pennsylvania Railroad Co., to help 
round out our consideration of the role of electronics and automation 
in railroading. Mr. Hursh will appear on the morning of October 27. 

We are particularly sorry that Mr. Sheldon Hall, president of the 


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Office Equipment Manufacturers Institute, will be unable to be with 
us as we had hoped on October 26 because of very serious illness in his 
family. 

We are particularly sorry about this since the office equipment indus¬ 
try is clearly one of the central areas in the trend toward automation, 
with their various computing devices and electronic recording ma¬ 
chines. Through the widespread publicity and advertising given 
these thinking “robots,” capable not only of taking over the traditional 
manual efforts on the part of human beings, but capable of injecting 
some substantial measures of memory ana of even “thinking” proc¬ 
esses, they have naturally captured the public imagination. 

Some of these machines have even undertaken to predict election 
results and left their friends trying to explain that the machines never 
make errors—only the human beings who control them. One of these 
machines, called Erma—which might well sound like a hurricane to 
those affected—has recently been getting a lot of publicity because it 
can reputedly do the chores of 50 bank clerks. 

Having read the advertisements of companies in this industry with 
their promises of labor saving and displacement, we, of course, tried to 
get representation from this industry by asking to hear from several 
of the leading companies, and finally, their trade association—the Of¬ 
fice Equipment Manufacturers Institute. While Mr. Hall personally 
has our sincere sympathy and understanding, we are sorry that no 
other spokesman for this important industry could be found, even by 
the institute’s executive committee. Perhaps if there is another or 
future occasion to hold hearings on this subject, we can get One of 
these thinking, computing, data-processing machines to be on hand 
to speak for itself. 

Turning now to the participants at this morning’s hearings, I un¬ 
derstand, Mr. Diebold, that you have recently given up the editorship 
of the magazine Automatic Control and that Mr. Harry D. Wulforst 
is now the editor. 

Your book, Automation, the Advent of the Automatic Factory, has, 
of course, been one of the best known in the field. I have read the 
address which you gave at the 1-day conference convened under the 
auspices of the Congress of Industrial Organizations last April, and 
have heard reports of a speech which you made earlier this week at the 
special conference on automation, sponsored by the American Manage¬ 
ment Association. 

I understand that you are also the president of John Diebold & 
Associates, Inc. For the record I wonder if you could tell us a little 
bit about the activities of this company. 

STATEMENT OF JOHN DIEBOLD, PRESIDENT, JOHN DIEBOLD & 

ASSOCIATES, INC. 

Mr. Diebold. At the present time I am devoting all of my energies 
to the practical application of automation to American industry 
through the management consulting firm of John Diebold & Associ¬ 
ates, Inc. We are a firm of consulting management engineers, special¬ 
izing in the field of automation as applied to both the office and the 
factory. - The growth of this firm during the past year and a half has 
been very substantial. With 16 people on ,the payroll we are now the 
largest—and I believe quite widely recognized as the leading—man- 


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agement engineering firm specializing in the field of computers and 
automation. 

Specifically, we are engaged in the business of putting automation 
to work for the benefit of our clients—American firms ranging in size 
from the very largest corporations to the very small. We are familiar 
with almost every major automation program in this country, and 
provide counsel on the engineering and technical aspects of automa¬ 
tion as well as ,the organizational and managerial aspects. Although 
we develop the engineering specifications for automation equipment, 
we do not design or manufacture the equipment itself. I think that 
this should answer your question, as far as defining the scope and 
nature of the activities of John Diebold & Associates, Inc. 

Is it your intention that I proceed? 

The Chairman. You may proceed in your own way, sir. 

Mr. Diebold. I would like to say it is a privilege to be here, sir. 
I think all Americans welcome the initiation of these hearings, and 
the attempt to derive some factual information about automation and 
its impact upon the economy. I think it is a curious paradox that the 
more we talk about automation, the less confidently we can assume a 
common understanding of the term. The word has come to mean so 
many things, to so many people, that (for the moment at least) it 
seems in danger of losing a great deal of its usefulness. Automation 
has become an issue and as a result is too often discussed with less 
regard for the facts than for the particular preoccupation of the 
speaker. 

We have heard automation characterized variously as a potential 
threat to the national economy; as a key to increased leisure oppor¬ 
tunity ; as a mystical pseudoscience of robots and giant brains; and as 
a press-agent’s description of automatic operation, from the kitchen 
toaster to the subway turnstile. If you follow the progress of Dag- 
wood, you may have noticed that as of this morning Dagwood is faced 
with possible replacement by an automatic machine. As you have 
said, automation is certainly capturing the popular imagination, and 
is being very widely—if not always wisely—discussed. 

As I understand it, my mission this morning is to try to make clear 
some of the characteristics of automation—“the nature of the beast.” 
If I am not mistaken, during the next 2 weeks of hearings you will 
receive a great many different and conflicting definitions of automa¬ 
tion. The most common statement, in this respect, is that automation 
is merely an extension of mechanization. It this is the case, there 
certainly seems little justification for a separate new word to de¬ 
scribe it. 

I think that if the facts are looked to, if what is actually happening 
at the present time is analyzed, it is possible to come up with a par- 
t ticular set of changes that are occurring in industry and in business 
that perhaps justify the use of a new word to describe them. It seems 
to me this is more than simply the introduction of new kinds of hard¬ 
ware, or a particular kind of technology. It is a basic change in pro¬ 
duction philosophy. 

Our original and traditional attitude toward the organization of 
industrial processes has been to organize our industry according to a 
division of labor. When we first organized factories and businesses, 
we found it necessary to break down our work, to allow for a division 


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of labor according ,to specific human skills. Later, as we mechanized 
our activities, and introduced machines mto factories, we followed the 
same breakdown, the same division of labor, and we mechanized 
around that division of labor. We introduced machines into specific 
departments of plants and into sections of plants to do activities that, 
were organized originally according to the division of labor. Now, 
through automation—and I think this is perhaps the basic meaning 
of automation—we are beginning to look at our industrial processes as 
complete, integrated systems, from the introduction of the raw mate¬ 
rial until the completion of tne final product. This may be a physical 
product, or (in a business process) it may be information. We look 
at this as an integrated system, and we try to weld together the parts 
of that system in order to optimize the use of our resources—the 
human resources and material resources and capital resources that 
are being used to produce the end product. It seems to me this is 
basically a change in production philosophy. It is something analo¬ 
gous to Henry Ford’s concept of the assembly line. It is a way of 
looking at, as much as it is a way of doing, a technology. 

One way of defining automation is to say that it is a means of 
organizing or controlling production processes to achieve optimum 
use of all production resources—mechanical, material, and human. 

There are two basic steps that industry follows in the approach 
toward automation. The first"of these is the organization of each of 
the several steps of the production process into a fully integrated 
system. The oil refineries pioneered in this step; the chemical indus¬ 
try, processing industries, and nuclear production have since followed 
in going through this first step of automation. They have changed 
what had formerly been batch processes into integrated systems. 

The second step of automation is to take the system and to control 
it in such a way that it operates at optimum all of the time. I think 
there has been a great deal of confusion upon this point, and you may 
very well see this reflected in some of the statements during tne course 
of the hearings. People who are not familiar with ,the process indus¬ 
tries will point to oil refineries and say: “This is automation. Other 
industries are going to develop in the same way.” Actually, by the 
introduction of control systems into oil refineries and other processing 
industries—paper manufacturing, sugar refining, chemical manufac¬ 
ture, etc.—a second stage of automation is being achieved. Here it is 
not a case of replacing hand labor by machines, but rather of operating 
the machines at optimum efficiency all of the time. 

I think it is possible to characterise the nature of automation by 
three simple statements: First, the concept of automation is very 
simple. It is a welding together, as I have said, of the production 
steps. It is looking at production processes as closed and integrated 
systems. Secondly, the technology of automation is incredibly com¬ 
plex. It is easily among the half dozen most advanced technologies 
of our time. Fundamentally, it deals with the transmission and use 
of information for the purposes of machine control, and for the pur¬ 
poses of optimizing production. I think you may be interested in the 
origin of this technology. The individual use of self-regulating 
mechanisms—devices that can regulate the course of their own ac¬ 
tivity—is very old. It goes back to the float-control valves the 
Romans used, and devices used by the early Dutch to keep windmills 


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facing into the wind. James Watt devised a regulator, the “flyball 
governor,” to keep his steam engine operating at constant speed, and 
mere have been a number of other uses of this concept of self-regula¬ 
tion, which is known as feedback. 

During World War II, the theory and use of feedback was studied 
in great aetail bv a number of scientists in this country and in Eng¬ 
land. The introduction of rapidly moving aircraft very quickly made 
traditional gun-laying techniques of antiaircraft warfare obsolete. 
It was impossible to follow such rapidly moving targets manually. 
As a result, a large part of the scientific manpower in this country 
was directed toward the development of self-regulating devices and 
systems to control our military equipment. It is out of this work that 
the technology of automation, as we understand it today, has de¬ 
veloped. During the last 10 years, this technology has begun to be 
applied to industry. Yet it is not so much the technology itself, but 
rather the way it is applied, that is properly called automation. 

I think the third point about automation that may help to give 
an understanding of its nature is that its application is very wide¬ 
spread. Automation can be applied in many types of businesses and 
industries. If automation is regarded as a philosophy, a way of 


where only a small amount of actual mechanization is possible. It 
seems to me that a good example which will clarify this point is the 
automation of office procedure. We have developed, through the 
use of the new technology, the machines you mentioned in your in¬ 
troduction: Computing machines and data-processing equipment. 
Through the use of this equipment it is possible to automate office 
operations which hitherto have been conducted entirely by hand. 

In the factory, automation means basically two things: It means, 
first of all, the integration of production machines, which may in fact 
be no more than a new level of mechanization. An often-cited ex¬ 
ample is the Ford plant in Cleveland, where injection blocks are 
made quite automatically by the use of a series of special-purpose 
machines—an automatic mass-production line. 

Most of American industry, however, depends upon short runs of 
product. About 89 to 90 percent of all American production is in lots 
of less than 25 individual pieces. It is impossible to build special- 
purpose machines to manufacture these, because the character of the 
product changes too frequently. This is where the second meaning 
of factory automation comes in. In such a job-shop operation auto¬ 
mation is just beginning to be achieved, in the form of tape-controlled 
machine tools—machines for which instructions can be provided in a 
flexible and variable form. This kind of automation is just beginning 
to have an impact. It gives every impression of taking a very long 
time to come about. 

All of these facts about the nature of automation—and I am sure 
you will hear many more during the next few weeks—are different 
aspects of what is basically a single new philosophy, and a single 
new technology. 

What does all of this mean to the economy? Fundamentally, I 
think automation means an optimization of our business and indus¬ 
trial activities. For example: A paper-pulp mill may operate con¬ 
siderably below the optimum point for a large part of the time. It 


large part of the time. It 


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will only be for a very short period after the regulating devices 
have been manually set that such an operation will make full use of the 
material resources that go into it. With automation, it is possible 
to introduce self-regulating control systems. Instead of operating at 
optimum, at the best relationship of all the variables—and in the 
process industries there may be thousands—for only a few minutes 
a day, it is going to be possible to operate at optimum for most of 
the day. Here, obviously, the introduction of automation is not 
justified by decreases in labor costs; it is justified by increasing the 
utilization of capital investment, by increasing the utilization of the 
raw materials. 

Such “automated” equipment operates 168 hours a week, rather 
than 40 hours a week. It makes possible better utilization of capital 
equipment, higher productivity, a greater rate of return. Call it 
what you will, what it amounts to is less capital investment per in¬ 
dividual unit of output. I think there are a number of facts about 
the economics of automation that have been very superficially ap- 

E roached, and I am sure that some of these will be brought out in the 
earings. 

I think that this represents one of the very important and good rea¬ 
sons for holding such hearings. A great deal of factual study must 
be undertaken. I think that you will make clear the need for such 
a study by these hearings. A more detailed and comprehensive 
analysis of what precisely is happening in various industries—an ex¬ 
tension of the case studies that you plan to undertake during these 
hearings—is, I think, called for to make clear to all concerned—and 
we are all concerned—the real nature of automation, and its effects. 

It seems to me the key to the economic impact of automation is the 
rate of speed at which it is introduced. If the changes of the last 50 
years had been compressed into the space of 2 or 3 years, we would 
have witnessed economic chaos. If tne changes of automation took 

S lace overnight, we would undoubtedly have reason for concern. I 
on’t believe that is going to happen. I think that this, too, is some¬ 
thing that will be brought out during the next few weeks’ testimony. 

It take a long time to effect automation. A reorganization of our 
business and industrial processes is a very difficult and lengthy busi¬ 
ness. My own firm is directly in this field, and I can speak from 
substantial experience. It takes a long time to bring about such 
changes. 

I think that an assessment of the actual rate and extent of automa¬ 
tion is called for. I would like to introduce into the testimony an 
outline of a factual study of automation that I have prepared for 
your use as background material. 

The Chairman. Do you desire to insert it in connection with your 
remarks ? 

Mr. Diebold. Yes, sir, if I may. 

The Chairman. You may do so. 

(The above material is as follows:) 

Notes Toward an Economic Study of Automation 
By John Diebold, John Diebold & Associates, Inc., New York, N. Y. 

In my previous remarks, I have attempted to describe what automation is, 
and how it is currently being applied in American business and industry. For 


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the past several years there has been a great deal of discussion about the 
impact of automation, but with regard to the fundamental economic issues 
involved, this discussion has been largely conjectural. To my knowledge, no 
economic study has yet been undertaken to discover precisely how automation 
affects the structure of industry, the labor force, and human relationships. 
The significance of automation is widely recognized, and has been conscripted to 
service in more than one cause: yet of the precise nature of that significance 
little has been said, for the quite simple reason that little is known, in a com¬ 
prehensive, quantitative sense. 

THE NEED 

The problem, in assessing the economic and social impact of automation, is 
that we do not have the facts. If there is concern over the effects of automation, 
it seems to me highly desirable that we get these facts in the most expeditious 
way possible: through a thorough analysis of automation, based on a complete, 
factual, industrywide investigation. Such a study would provide, for the first 
time, a realistic basis for planning on both a national and private scale. With 
the broader perspective such a study would provide, industry could plan auto¬ 
mation policy with a finer regard for the consequences. National policy con¬ 
cerning education and training programs, retirement benefits, and unemploy¬ 
ment compensation must be based upon such a factual and intimate understand¬ 
ing of the subject. 

The following is an outline of what seem to me the major economic questions 
raised by automation. No attempt is made to suggest the answers to these 
questions: The purpose of this brief statement is to suggest the broad issues 
and to indicate a number of specific questions of special significance. 

THE MAJOB ISSUES 

Obviously, the most fundamental issues are those raised by the following 
questions: 

How does automation affect the stability of employment? 

What are the implications of automation for economic stability? 

The answers to these questions obviously depend upon the answers to a great 
number of specific questions concerning the extent and rate of automation 
within a given industry, and within individual firms. It has been frequently 
suggested (indeed, it is the basis for labor’s campaign for the GAW) that auto¬ 
mation in a given plant or industry tends to reduce the stability of employment. 
Though we should be foolish to rule out this possibility as an assumption of the 
proposed study, there is reason to believe that precisely the opposite may be true. 

Automation implies a decrease in direct labor and an increase in capital costs. 
Traditionally, when in depressed circumstances, firms have tended to maintain 
prices and decrease production—and consequently employment. In an auto¬ 
mated firm, however, with the consequent decrease in direct labor and increase 
in capital costs (which must be carried regardless of the level of output) adjust¬ 
ment may very well be different. The advantages of labor layoffs will be less 
apparent, and output will more likely be maintained, because of fixed capital 
charges. As a result, changes in demand will, in all likelihood, affect prices 
rather than output and employment. Thus greater stability of employment is 
seen to be a likely consequence of automation. 

Other questions which seem to me to be of primary significance are: 

How does automation affect the relative income shares of capital and 
labor? 

How are wages in automated industries altered relative to wages in non- 
automated industries? 

What is the process by which wage increases (or other benefits) in auto¬ 
mated industries spread to nonautomated industries? 

How does this affect interindustry competitive relationships? (i. e., are 
there examples of companies forced to close all or part of their production 
facility because of inability to meet higher wage rates in an automated 
industry, or are these increases passed on in higher prices?) 

I believe it is generally recognized that productivity is determined by tech¬ 
nology (although it may be expressed in labor terms). According to traditional 
distribution theory, returns to the factor of production under competition are 
determined by their marginal productivity. This is, of course, quite theoretical, 
but it raises the interesting question: How is it possible to determine the mar¬ 
ginal product of labor when (as in a highly automated industry) most of it is 

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indirect? Remove a single maintenance man from a highly automatic process, 
and production may be forced to stop. Does this mean (as the marginal pro* 
ductivity theory implies) that the entire product must be attributed to a single 
worker? 

Nor is it much more useful to talk in terms of the mar'ginal product of capital, 
because the same amounts of money invested in different types of equipment 
may have very different productivities. The marginal productivity theory 
assumes the homogeneity of capital, and I believe it is commonly recognized 
today that capital is far from homogeneous. In this sense, a great part of 
economic theory seems, at this point, in need of some rethinking. Automation 
simply makes the need more obvious. 

The questions which must be answered, in this regard, are: 

What is the significance of traditional marginal analysis when (as in a 
highly automated industry) there is a great shift from direct to indirect 
labor? (i. e., how can any product be identified with any individual worker?) 

What does it mean to talk about the productivity of capital when capital 
is nonhomogeneous? 

I believe it is becoming increasingly clear that the effects of automation con¬ 
cern not only questions of productivity and employment, but in fact the very 
way we regard these questions—that is to say, the nature of economic theory. 

HOW SUCH A STUDY MIGHT BE PERFORMED 

/ 

It seems to me that there is, at this point, only one useful way of collecting, 
organizing, and analyzing the information necessary to such a study as that 
which I have proposed: a detailed case-by-case approach to a number of specific 
industries which are regarded as typical of the several kinds of automation 
practiced today. The schedule of industry and labor spokesmen to be witnesses 
to these hearings indicates, it seems to me, that the members of the committee 
also consider such an approach valuable—although for the purpose of a factual 
study, of course, a much wider sampling would be required. 

There are a number of organizations—foundations, Government agencies, 
universities, private consulting firms—qualified to conduct such a study at the 
present time. Since the subject seems to fall naturally into certain divisions 
of major significance, the study itself might well be similarly divided among a 
number of specially qualified agencies. I should certainly think that some sort 
of Government sanction, official or otherwise, would prove an enormous advan¬ 
tage in obtaining the information required. 

A great deal of the necessary information might be elicited through detailed 
questionnaires and interviews; a certain part of it, however, would require 
considerable fieldwork by personnel with a background in automation engineer¬ 
ing. A likely approach would be to work, at least in the beginning, with the 
cooperation of automatic equipment manufacturers and engineering consultants 
who have worked in automation. 

Beyond the general issues I have already raised, I should like to suggest at 
this point a number of more specific questions which represent the kinds of 
information which should be gathered for such a study. For purposes of simpli¬ 
fication, I have chosen to divide these questions into a number of impact areas: 
obviously no such division actually exists; whatever affects industry affects 
labor, and in turn, the entire community. By such arbitrary division I mean 
only to indicate the nature of the questions involved. 

I. Automation and industry 

Answers to the key questions below must be sought by analyzing developments 
within particular industries. 

A. What industries are using the techniques of automation? 

B. How are these techniques being applied? What degree of the total produc- J 

tion capacity may be described as automated? 31 

O. How rapidly is automation being introduced? When did the industry 
(company) first begin consciously to automate? What current technological 
or economic development might affect the rate and/or degree of automation? 

D. To what extent (in a given company) does automation permit the manu¬ 
facture of goods or the performance of services not possible otherwise? To 
what extent does automation permit production of goods and performance of 
services now possible but with less labor and/or less capital? (See F-3.) 

E. What industries not highly automated could be so, if present technological 
advances were applied? What has prevented the introduction of automation 


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in these industries? Within highly automated industries, what companies have 
•conspicuously not automated? What are the reasons given? How many com¬ 
panies avoid automation because they cannot afford the initial investment? 
Because they don’t want to take risk? 

F. How is industry structure being affected? 

(1) Is there a tendency toward greater centralization or decentralization? 

(а) Geographically? 

(б) Administratively? 

(2) How is company organization affected? 

(3) Will expansion or contraction be the more likely results? 

(a) What is the nature of cost savings made possible by automation? 

(b) How are these savings reflected in pricing policies? 

(o) How does the market respond to a lowering in prices? 

(4) What happens to competition? 

(а) As a result of high capital requirements? 

(б) As a result of optimizing productivity? 

(c) As a result of patents? 

(5) What is the prevalence of merger unions in automated Industries as com¬ 
pared with nonautomated? How has automation affected the current trend 
toward product (or service) diversification? 

(6) What changes in power and natural resource demands has automation 
caused? 

II. Automation and labor 

Because the effects of automation vary not only from industry, to industry, 
but also from firm to firm, labor implications must be distilled from case studies 
analyzing specific instances. 

A. In individual industries (company by company) how; is employment 
affected? 

(1) What change in total employment (of automated segment) of direct 
labor? Indirect? 

(2) What particular job skills have been made obsolete? 

(3) What new job skills are required? 

(4) What proportion of new job skills can be easily acquired by workers with 
obsolete skills? 

B. How does automation affect the level and structure of wages? 

C. How does automation affect job equity? 

D. How are industrial-relations policies and hiring policies changed? 

E. What are worker attitudes toward automation? 

F. How has automation affected collective bargaining? 

G. How has automation affected working conditions (Safety? Machine pac¬ 
ing? Increased responsibility? Improved work area?) 

H. How have union jurisdictions been affected? 

I. How has internal union organization changed? 

III. The automation equipment industry 

It has been estimated that in 1954 $3 billion was expended on automation 
equipment; and that by 1960 the volume will expand to $10 billion. What 
are the characteristics of this industry? 

A. What is the nature of the firms producing automation equipment? What 
proportion are new firms? Of old firms, how great a part of the total pro¬ 
duction effort is involved? Does this represent a major diversification? How 
rapidly have firms expanded in this field? What is the incidence and nature 
of mergers? 

B. What portion of total output is absorbed by military and/or defense needs? 
What is the role of the Government in purchasing, research, and product 

f development? 

O. What is the effect of patents? 

IV. Education and automation 

Automation greatly increases the need for personnel trained in the design, 
construction, supervision, and maintenance of automatic equipment. It in¬ 
creases our already urgent need for more engineers, and imposes a special 
demand for a new kind of engineer—the systems engineer. From top manage¬ 
ment to the semiskilled production-line worker, automation requires entirely new 
kinds of training. 

A. What are the specific retraining and educational requirements of auto¬ 
mation? 


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B. What kinds of training programs have been undertaken? By firms? By 
public schools? Private institutions? Unions? Equipment manufacturers? 

C. Upon whom should the responsibility and cost of retraining fall? The 
worker? Company? Equipment manufacturer? State or Federal Government? 

D. How has the present supply and quality of engineers and technical per¬ 
sonnel affected the degree and rate of automation? Has a shortage of trained 
personnel discouraged any firms from introducing automation? How has this 
supply affected the development and production of automation equipment? 

E. Does automation increase or decrease the range of jobs for which women 
are qualified? 

F. What specific problems does automation raise for older workers? Is the 
nature of retraining necessarily too difficult for older workers? Have com¬ 
panies shown an unwillingness to retrain older workers because of the com¬ 
paratively reduced return? 

V. Automation and the community 

Beyond the challenge to the community implied in all the previous questions, 
automation suggests another special question of considerable significance. Labor 
leaders have consistently cited the shorter workweek as their next objective, 
after the establishment of the guaranteed-wage principle. J. Frederick Dewhurst, 
director of the Twentieth Century Fund, has estimated that by 1975 Americans 
will be working a 32-hour, 4-day week. 

A. How will this increased leisure affect consumption patterns? How will 
this, in turn, affect the growth of service industries? 

B. How will this affect the requirements of our transportation, educational, 
and recreational facilities? 

C. Does it imply a need for basic changes in the nature of our primary- and 
secondary-school training? (I. e., Is it true, as some psychologists observe, that 
the majority of people in this country are not able to make effective use of 
increased leisure opportunities?) 

The questions raised here are far from comprehensive: the effects of auto¬ 
mation are many and widespread. I have attempted only to indicate those areas 
of change with which, I should suppose, the Federal Government would be 
most immediately concerned. A study based upon such questions would surely 
be or enormous value to the Government in planning tax policy, educational 
appropriations, and pension and unemployment compensation provisions. 

I hope that the hearings now beginning will stimulate interest in such a 
study as I have proposed and believe that the real need for more information 
upon the subject of automation will become evident in the course of these in¬ 
quiries. Such a study would go a long way toward reducing the confusion 
and mistrust which automation seems to have generated among a great part 
of the public, and I am sure would be welcomed at this point by industry, labor, 
and the American public itself. 

Because it is the only comprehensive account of the subject of automation 
currently available, I have taken the liberty of inserting at this point, a brief 
condensation of my book Automation, with a few minor revisions. I believe 
it will prove a valuable glossary and general reference in connection with the 
testimony presented at these hearings. 

(Text of condensation follows:) 

[Condensed with permission by the Controllership Foundation, from Automation, by John 

Diebold. Published by D. Van Nostrand Co., Inc. Copyright 1952. Library of Con¬ 
gress Catalog Card No. 52-13631] 

A Condensation of the Book Automation, by John Diebold 

CHAPTER I. THE PROBLEM OF AUTOMATION 
The uoord automation 

For a long time I have searched for a definition of automation that would be 
of use to me in an operational way—as a guide in my everyday task of planning 
changes in factories and offices. It is difficult enough to define the word in a 
manner at once precise and comprehensive; it is even more difficult to make that 
definition useful in narrowing the wide scope of the problem to a workable 
range. In the course of these hearings, I am sure we will all gain some new 
insights into the problem. In the meantime, I offer the following for your con- 


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sideration, hoping only that it will prove as useful to you as it has‘to myself. 

Automation is a means of analyzing, organizing, and controlling our. produc¬ 
tion processes to achieve optimum use Of all our productive! resources—-mechani¬ 
cal and material as well as human. 

Whether the product be a cylinder head, a radio receiver, a synthetic fiber or 
information, it is a concern with the production process as a system, and a subse¬ 
quent consideration of each element as a part of that system. In planning for 
automation primary attention is directed toward the system, and the task of 
integrating the separate elements into the system. The whole problem of produc¬ 
tion is approached anew—even the product is reappraised in terms of its func¬ 
tion and the functions of the machines that handle it. 

The idea is not new 

Automation is not a new idea—in 1784 Oliver Evans built an entirely auto¬ 
matic, continuous process flour mill just outside Philadelphia. No human labor 
was required from the time the grain was received at the mill until it had been 
processed into finished flour, and in 1801 Joseph Jacquard exhibited an auto¬ 
matic loom controlled by punched paper cards, similar to those used in modem 
office equipment. As the steam age progressed, use of automatic machines in¬ 
creased. By 1833 even biscuitmaking had been mechanized at the British Navy's 
“victualizing office.” 

Although some forms of automatic controls have been in existence since early 
stages of the steam age, until recently development of automatic controls has 
been sporadic. Automatic mechanisms developed before the last decade generally 
were designed for performing a limited number of tasks. 

Developments of the last decade in the field of electronics, communications 
and electric network analysis have made possible a wide variety erf self-correcting 
and self-programing machines, capable of automatically performing a sequence 
of logical operations. They can correct the errors which occur during their own 
operations and can choose, according to built-in criteria, from among several 
predetermined plans of action. These are the technical bases on which auto¬ 
matic factories can be built 

Essential elements for developing automatic factories 

Although automatic control mechanisms are necessary elements of fully auto¬ 
matic factories, they are not sufficient in themselves. Other elements essential 
to developing fully automatic processes and factories are: 

Product and process redesign. 

Analysis of processes in terms of functions rather than steps now being 
performed. 

Rethinking the entire operation. 

These are often infinitely difficult problems which, nevertheless, must be 
solved before business can realize advantages of the Aladdin’s lamp which is 
held forth by technology. 

Loose thinking 

Much of the published material on automatic processes and factories presents 
the problem as primarily one of control. Very little has been said about the 
underlying techniques which are the really important part of these new devices 
and which can permit design of entirely new industrial equipment. 

• Furthermore, little published material is available on the changes that must 
be made and problems that must be solved before electronic circuits and controls 
can make automatic production possible. 

CHAPTER n. CONTROL AND THE COMPUTER 

Communications theory and control 

The basic contributions of communications theory in the last decade have 
been the concept of the bit or indissoluble unit of information and an analysis of 
transmission of these units in the presence of noise. Noise in this sense means 
disturbance in the meaningful patterns of bits of information during their trans¬ 
missions. 

Simultaneously, and related to these developments in communications theory, 
has been the development in control theory of stable feed-back or self-correcting 
control systems for a wide range of uses. These feed-back or self-correcting con¬ 
trol systems are also called closed-loop, or servo-mechanism systems. Research 
in this country and in Britain has developed the closed^loop systems sufficiently 


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so they can conform to rigid performance specifications and operate in a stable- 
manner. 

These developments in communication theory and control, plus electric net-, 
work analysis, have made possible electronic digital computers which eventually 
may supplant many functions now performed by human beings in industrial 
control. It is the perfection of stable closed-loop control mechanisms, as a part of' 
the development of electronic digital computers, which plays the most important 
as well as the earliest role in automation. 

Basic types of automatic control mechanisms 

Automatic control mechanisms are of two basic types: open-loop and closed- 
loop (self-correcting). Both types may possess two characteristics important for* 
industrial control: 

1. Control at low energy levels, that is, the energy required to operate the 
controls need have no particular relation to the energy being controlled. Thus,, 
it is not necessary to build complicated automatic control devices in a form, 
capable of carrying high-energy flows. 

2. Control from a distance, that is, the control element can be placed at a 
great distance, if necessary, from the element being controlled. This, for example,, 
makes possible grouping of all controls of a chemical process plant in one loca¬ 
tion, so that a fully automatic control system can be built. 

The most important control characteristic, however, from the standpoint of* 
automation is the ability to correct errors. The ability to correct errors is the- 
distinguishing characteristic of the closed-loop control system. 

Automation is possible only through the use of stable closed-loop control? 
systems capable of a variety of applications. 

Open-loop control 

The open-loop control is one in which the control mechanism is independent 
of the performance of the system which it controls. Many “automatic” controls- 
are of this type. For example, street lights which are turned on by a preset 
mechanism at a specified hour, or hours, operate regardless of natural light con¬ 
ditions. Darkness caused by heavy clouds in the late afternoon, or by fog, will: 
not turn on the lights before the specified hour. 

Closed-loop controls 

Operation of the control device in the closed-loop system is, in part, a function 
of the actual performance of the system or machine being controlled. This 
distinctive feature of the closed-loop control mechanism makes possible the indus¬ 
trial development which has become known as automation. 

A thermostatically controlled electric oven is a good example of a closed-loop- 
control system. Such a control will automatically compensate for fluctuations 
in the electric current, the amount of prior operation and even for opening or 
closing the oven door. The temperature in the oven will be held within a very- 
small predetermined range. 

Human use of machines and tools which have only simple open-loop controls 
depends on a closed-loop system of control in which the human muscular and! 
nervous systems provide the closing of the loop. 

Development of closed-loop control 

The earliest application of closed-loop control mechanisms was regulations of' 
the speed of machines, for example, James Watt’s centrifugal governor for steam 
engines. 

Another major step in development of closed-loop control systems was remote 
position control which made its first appearance toward the end of the 19th 
century in the form of control systems for the steering gear of ships. 

Development of closed-loop controls for industry did not really get underway 
until the decade of the 1930’s. In that decade, attention was directed to control 
mechanisms for oil refining and certain chemical processes. The military de¬ 
mands of World War II, however, gave the greatest impetus to development of 
electronic servomechanisms (closed-loop control systems). These development* 
have made possible the design and construction of stable closed-loop control 
systems capable of performing a great variety of tasks. 

The computers 

The electric analogue computer and its techniques are most useful for models, 
or analogues, of industrial processes and fox determining the reaction of the 
system to various operating conditions to which it may not be possible to subject 


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the actual system or process itself, for purpose of experiment. A much publicized 
“model” of this sort is the model electric power system or grid. 

The electronic digital computer relies on the basic arithmetic of addition and 
subtraction for its operation. By performing a long series of essentially “elemen¬ 
tary school” steps in very rapid sequence, it is possible for such a computer to 
solve highly intricate problems very rapidly. Computers can also compare, col¬ 
late, and make logical choices between alternatives. But such choices are based 
upon built-in and alterable instructions, the computer having no semblance 
of free will. 

Mathematical notations and words are both symbols for ideas or quantities. 
“Word symbols” can be altered to correspond with symbols which a computer la 
built to handle. Thus, it is possible for computers to handle all types of infor¬ 
mation. 

Most computers are now built to handle binary numbers. Binary numbers are 
composed of only 2 digits, most commonly 1 and 0, and represent all higher 
numbers by combinations of these 2 digits. Similar combinations of 1 and 0 can 
also be used to represent letters of the alphabet. Hence, it is basically no more 
difficult to handle logical problems represented by word symbols than to handle 
mathematical problems. 

The physical construction of computers varies greatly but functionally they aU 
contain much the same type of unit. These are: 

A computing element which actually processes and compares data or makes 
a logical choice. 

A control element which schedules the sequence of operations and auto¬ 
matically programs the action of the computing unit 

A memory or storage element capable of retaining in permanent or tem¬ 
porary form information necessary for operating the machine. 

In addition, there is an input unit, necessary to introduce information into 
the computer, and an output unit to withdraw and record information from the 
computer. 

Because of the exceedingly high speed at which electronic computer elements 
operate, at present the real bottlenecks of the computer for business use are the 
speeds of programing (input) and printing (reporting and recording) units, and 
limitations of the memory capacity. 

To program a computer, for example, it is necessary to know precisely what 
is required and to reduce the problem to a series of precisely defined, elemental 
steps. At each stage the machine must figuratively ask a question which can be 
answered by “yes” or “no,” represented in binary form. Many of the decisions 
we make unconsciously, even when solving the simplest business or production 
problem, would fill pages when set down in the form of computer programing, 
with alternative courses of action indicated at each step. 

Despite these problems, digital computers provide a means of automatically 
governing the operation of much of our manufacturing equipment. With proc¬ 
esses permitting a continuous flow of product units, completely automatic plants 
are possible. In even more cases, however, portions but not all of the operations 
of a business can bejput on an automatic basis. 

CHAPTER m. THE REDESIGN OF PRODUCT AND PROCESS 

Rethinking products and processes essential 

Industrial automation brings new problems as well as new solutions. In many 
cases we must redesign our products, our processing methods, and our machines 
in order to harvest all the fruits of automation. But to redesign products and 
processes we must rethink them. 

Popular misconception 

A widely held misconception about automation is that since all the elements 
of the automatic factory are already with us, all that remains is to connect the 
proper instruments to the computer (central control mechanism) and attach our 
machines. This simply is not true. 

Actually, redesign of product, or of process, or of machinery—and sometimes 
redesign of all three—is usually necessary to take full advantage of the new 
technology. It is both erroneous and self-limiting to think of the possibilities 
of automation merely in terms of connecting today’s machines to electronic con¬ 
trols and making precisely the same products we make today in much the same 
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There is an enormous difference between a process which merely makes use of 
automatic controls and a process which is truly automatic. The steel industry is 
a good example of this distinction. Many automatic control devices are used 
in steel production but, except for continuous casting, steel production is not 
automatic. There is, moreover, little likelihood of it becoming automatic re¬ 
gardless of how many electronic control devices we may employ unless we rethink 
the entire process of steelmaking. 

Automatic continuous casting made possible by rethinking the process 

In most steel casting mills, the casting procedures used today are essentially 
the same as processes in use many years ago. Steel men have long hoped and 
searched for a continuous casting process. But continuous casting became a 
reality only about 10 years ago, and then only for nonferrous metals. 

A continuous brass casting process has been used for some time by Scovill Man¬ 
ufacturing Co. with great success in production of brass castings of uniform 
cross section. 

Republic Steel Corp. and the Babcock & Wilcox Tube Co. were successful pio¬ 
neers in continuous casting of steel. Actually, after solving major problems by 
rethinking the process, these companies claim that the steel produced by their 
continuing casting process is considerably better than steel produced by con¬ 
ventional methods. In addition, the continuous process eliminates handling 
the steel between the ingot and billet stages. 

Redesign of product—Ice cubes 

Automation may require redesign of product as well as process. Frequently 
such redesign will not reduce customer acceptance—it may, in fact, increase 
saleability of a product. An ice cube designed with a hole in the middle allows 
fully automatic production and by providing a larger cooling surface, is a better 
product. The consumer does not object. 

Redesign of radio circuits 

Printed radio circuits provide another excellent example of a product rede¬ 
signed for automatic production. By thinking of circuits in terms of their func¬ 
tions rather than their present physical form, it has become possible to redesign 
the circuit in the form of flat planes. This has made possible the development of 
a machine for automatic production of radio circuits. As a result, only a small 
amount of manual work remains (in assembling plates, tubes, and amplifier) 
to complete the radio receiver. 

In developing this machine, John A. Sargrove actually solved some of the basic 
problems of the automatic factory because his machine allows for product 
change. A number of different radio receiver circuits can be produced with 
only slight variations in the mechanism. 

Other examples of redesign 

Recently Sylvania Electric Product Co. redesigned a miniature amplifier for 
airplane intercommunication systems to permit automatic manufacture. 

The A. O. Smith Co. did notable product redesign work during World War II to 
mechanize and speed production, among others, of airplane propellers and bomb 
shells. 

Product redesign for ease of manufacture is not limited to automatic produc¬ 
tion. It has been and is a continuing problem in industry. Product design engi¬ 
neers devote their entire attention to designing for ease of manufacture. For 
them the idea of redesigning a product to permit automatic manufacture is not 
new. Good product design engineers are familiar with such concepts as the 
doctrine of least constraint—a systematic approach in designing component parts 
to allow maximum freedom in manufacture. 

Semiautomatic production a step toward automation 

The following experience of one of the country’s largest manufacturers of home 
ranges would be considered an everyday example of product redesign for semi¬ 
automatic rather than fully automatic production. A few years ago this com¬ 
pany produced a total of 16 style-price variations of ranges. Production runs 
on any 1 variety were limited to 2,000 or 3,000. Through redesign all 16 vari¬ 
ations were reduced to 1 basic body type and style. Distinctions between price 
lines and styles were made by altering the top without changing the basic body 
design. Redesign permitted semiautomatic manufacture of a product that had 
formerly required many manual operations. It also helped bring this product 
within a price range of many people who had not previously been able to afford it 


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Actually such redesign is more a case of clever simplification and standardize* 
tion rather than of basic rethinking about the product. Both are important 
elements, however, in expanding the possible scope of automation. 

Rethinking essential to automation 

Rethinking is an attitude, a state of mind. It is an ability to get outside of a 
problem that seems insoluble and approach it in a new and different way. It is 
a constant reexamination of whether the problems we are wrestling with are 
really the problems we should be trying to solve. Rethinking is a constant 
awareness of the end functions of a product or process and a continued question¬ 
ing of whether those functions can be performed as well or better by making 
slight variations in it or by making fundamental changes or even changing to a 
new basis which will permit automatic production. 

It could be that rethinking should be extended to the organizational struct 
ture of the firm to get maximum benefits of automation. One of the impediments 
to rethinking of products and processes has been that the traditional division of 
responsibilities has the effect of localizing the areas in which rethinking is done. 
Almost by its very nature, however, rethinking (getting outside of a problem) 
must be done on an extremely broad base—viewing all implications of a problem 
in the light of objectives of the whole organization. 

Unit operations analysis 

Systematic analysis of production processes can help greatly in rethinking 
processes. But a new approach is necessary in such analysis. Processes should 
be analyzed in terms of their specific functional elements or units, and with 
particular reference to the functional elements common to the manufacture of 
several, perhaps dissimilar, end products. 

George Granger Brown and his associates at the University of Michigan have 
made such an analysis of processes in the “process” industries. Unit operations 
of various processing industries were analyzed to identify functional operational 
units common to all of them. Extension of this kind of analysis to industries 
manufacturing discrete product units (contrasting with continuous product flow) 
would be the basis for systematic, wide-scale approach to automation. 

CHAPTER IV. MAKING MACHINES AUTOMATIC 

The problem of short-run production of discrete product units 

The continuous process industries, such as oil refineries, are already highly 
automatic. But little attention has been paid to automatic manufacture of 
discrete units in fabricating industries which do not have long production 
runs of nonvarying products. A matter of primary concern in the extension of 
automation is the problem of automatizing the short- and medium-run manu¬ 
facture of discrete units of product. A manufacturer producing separate product 
units faces problems far different than does a chemical manufacturer. 

Importance of flexibility 

Nevertheless, the type of thinking and designing which converted the chemical 
and oil industries from batch processing to continuous processing could con¬ 
tribute much to the automation of discrete process industries. Many people in 
industry feel that the most sensible solution to automation would be to build 
a large, single-purpose automatic machine which would perform every operation 
necessary to convert raw material into finished product. 

Such machines are already in operation in many partially automatic factories— 
a Coca-Cola bottling plant Is perhaps the most familiar example of an almost 
automatic factory handling discrete product units. Many food processing and 
packaging plants use highly automatic single-purpose machines of a type similar 
to the Coca-Cola bottling machine. The textile industry, though not handling 
discrete product units, provides other examples of single-purpose, automatic 
machines. 

Fully automatic, single-purpose machines, however, are suited only to a very 
special case, the case of an extremely large run of a nonvarying product or of 
an only slightly varying product They lack the flexibility needed for short- and 
medium-run manufacture of discrete product units. 

Flexibility is the major factor to be weighed in determining whether the 
large single-purpose machine is the real answer to a more widespread use of 
automation in the manufacture of discrete units. Many of the widely publicized 
automatic and partially automatic factories depend upon Inflexible single-purpose 


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machinery which is not suitable to medium- or. short-production runs. Elements 
essential to the flexibility needed for the automatic factory are, however, present 
in today’s factories. These elements are the automatic and flexible materials- 
handling and machine-loading devices. 

For medium and short runs, flexibility is essential. Only when the problem 
of automatic production of medium and short product runs is solved will auto¬ 
matic control mechanisms be used to fullest advantage and on the Widest scale. 

New approach to machine design 

Eric W. Leaver and John J. Brown have proposed a new approach to the 
problem of automatic production for medium- and small-run plants. This in¬ 
volves designing machines in terms of functions to be performed rather than in 
terms of predetermined end products. The similarity of approach in the Leaver- 
Brown proposal and the unit operations analysis of George G. Brown is striking 
and stems from similar type of rethinking of the whole problem. Moreover, 
Leaver and Brown come close to the heart of the automation problem in attacking 
it by means other than the large single-purpose machine. 

But the Leaver-Brown approach is not entirely practical in industries such 
as metal working. A better solution of the problem would be, perhaps, to con¬ 
tinue thinking in terms of functions but to think of groups of related processing 
functions. In many fabricating operations a clearly definable group of functions 
is usually performed on a related group of products. This comes down to some¬ 
thing much like our present-day production machines. 

Production machines the middle stage of development toward automation 

Production machines are the middle stage between hand-operated and fully 
automatic machines. Production machines perform a series of machinery func¬ 
tions semiautomatically. Examples of this type of machine are the chucking 
machines, automatic screw machines, automatic milling machines, and automatic 
drilling, boring, and grinding machines. These machines perform a certan 
group of operations upon a product within a limited range of size variations. 

In designing flexible machine units for the automatic factory, the starting 
point would be a group of functions commonly performed on a class of product. 
If the automatic machine problem for medium-sized runs of product could be 
solved by means of automatic machines similar to our present-day production 
machines, we would have the beginning of a reasonably flexible and automatic 
factory. 

Then, if we could couple a group of production machines, or similar machines, 
designed around the group-of-functions-concept, by some form of inexpensive, 
automatic flexible materials-handling equipment, and add a control mechanism 
to do the work normally done by the operator, we would have a factory com¬ 
pletely automatic in terms of direct operation although there would still be 
need for considerable indirect labor. 

It is possible to build automatic flexible materials-handling equipment neces¬ 
sary to make an automatic factory economical for short production runs. Simi¬ 
larly, control equipment with necesary flexibility can also be built. The most 
important single factor in designing such equipment is to think in terms of end 
functons. The greatest pitfall to avoid is assuming that the design aim is 
reproduction of the hand movements of the operator or laborer in existing setups. 

Automatic machine loading 

Many semiautomatic machine-loading devices are already in operation. In 
designing automatic machine-loading devices for the automatic factory it is 
simpler to design them to perform the same function in a new and different 
way rather than mechanically to reproduce hand motions. Again, thinkin g in 
terms of functions is necesary. 

Flexible materials-handling equipment 

For fully automatic plants some type of flexible and universally adaptable 
materials-handling equipment will be necessary. To be economical, the ap¬ 
plication of the continuous-flow concept to the discrete unit processes requires 
flexible materials-handling equipment that can be easily purchased rather than 
specially designed. Standard conveyor equipment is already available. What 
is lacking is adaptable standard equipment for lifting, turning, and precise posi¬ 
tioning of product units of varying use. Equipment of this sort is now custom 
built. 

Ford Motor Co. has done much to apply the continuous-flow concept to pro¬ 
duction of discrete product units, and at Ford the production machines are 


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connected by automatic materials-handling equipment. However, these ma¬ 
chines are not flexible. Other pioneers are Chrysler Corp. (De Soto engine 
plant) and General Electric Co., through equipment designed and built by C. F. 
Hautau. 

The synchronization of a series of machines is not unique to an automatic 
factory; this problem exists in any production line. But in an automatic fac¬ 
tory the synchronization of the machines and of the machine output is critical. 
For an automatic factory it is vital that a continual and uninterrupted rate of 
progress be established and sustained. It is also necessary, for precise synchro¬ 
nization, to check constantly on the rate of output of each machine or group of 
machines. This function will ultimately be handled by the small digital com¬ 
puter. Simple, direct, interlocking controls can be used. They are already in 
use in a number of plants, such as the automatic automobile body frame plant 
of A. O. Smith Corp., the engine lines of De Soto and Ford. 

The crux of the problem, of course, is to devise inprocess inventory handling 
•equipment flexible enough for medium-sized runs. The essential needs are (1) 
adaptable conveyor or carrying devices that can handle a number of differently 
shaped products and that need not be custom built; (2) similarly flexible hopper, 
bin, and machine-feed units mass produced and adaptable to products of different 
sizes. 

An existing automatic factory 

The ordnance plant at Rockford, Ill., built by W. F. & John Barnes Co., is 
an automatic factory producing discrete product units. There are several 
manually controlled operations used in this plant, and further automation is 
possible at these points, but it is, nevertheless, an automatic factory. Notable 
points are the advanced use of flexible materials-handling equipment for in- 
process inventory and use of console controls to monitor the central loading 
device and the turning operations. 

Central-control mechanism 

One of the most promising industrial applications of the new technology of 
•control, not tried at Rockford or any other plant, is replacement of individual 
machine-tool controls by a central-control mechanism. This need not wait for 
perfection of low-cost computers or automatic flow of materials from machine 
to machine. Grouping the control circuits of individual machine tools in a 
central-control mechanism can produce substantial savings in many plants as 
they exist today. It is simply a matter of using control devices more efficiently 
by using them in a new way. Such adaptation of existing machine tools, how¬ 
ever, should be considered a transitional step toward automation. 

Individual machine control 

Development of stable, closed-loop (or feedback) computers opens the way to 
Increasing flexibility in automatic controls of machines. As the design of stable 
electronic feedback control systems becomes more thoroughly understood, it will 
be possible to build machines whose patterns of operations can be controlled 
automatically by an easily altered set of instructions governing every aspect of 
the machine’s operation. 

The problem of automatically varying a machine’s operation has been ap¬ 
proached in two ways: (1) in terms of providing instructions by punched paper 
or magnetic tape and translating these into movements of various parts of the 
machines by servomechanisms, or small motors, and (2) by developing copying 
mechanism^ which actuate the machine tools through a sensory device that fol¬ 
lows the contours of a finished workpiece or model. 

Examples of automatic machine controls 

For example, some time ago the Arma Corp. in New York demonstrated a& 
automatic lathe controlled by a punched paper tape. In 4 minutes, this lathe 
machined a workpiece which required 30 minutes when made by an engine lathe 
operated by a skilled machinist referring to drawings. Tolerances were held 
to 0.0003 of an inch. Only 15 minutes were required to punch the tape. 

A simple electrical, rather than electronic, machine-tool control will be manu¬ 
factured and sold by Olin Industries. It can be applied to any number of stand¬ 
ard machine tools. The hand controls normally used by the operator are simply 
fitted with small servomotors. 

The General Electric Co. in its record playback control records magnetically 
the actual motions of a machine tool when operated by a skilled machinist. 
Individual differences between machines would, of course, require that a sepa- 


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rate tape be made for each machine being controlled. This poses obvious limita¬ 
tions to use of the device in its present state of development. But record play¬ 
back control offers a very good solution to the problem of the short run of 
product. It means that automatic operation of machine tools is possible for the 
job shop—normally the last place in which anyone would expect even partial 
automation. 

A new family of machines 

These developments in automatic controls of existing types of machine tools—. 
essentially machine tools designed for manual operation—indicate the poten¬ 
tialities of electronic controls and the practical realizability of automation. 
Typically, the introduction of any new technology such as feedback first brings 
attempts to apply it to the present way of doing things. 

The most productive use of closed loop or feedback is in design and construc¬ 
tion of entirely new types of automatically controlled production machines. The 
new technology also has much to offer toward the automation of those areas 
of industry in which mechanization has made least progress—machine setup, 
materials handling, product inspection, and assembly. Closed-loop controls also' 
have much to offer toward automation of the office. It is clear that industrial 
automation will not be complete until all these functions have been made auto¬ 
matic. That will require rethinking the product or function, the process, even 
the machines themselves, to get optimum results from the new technology. 

CHAPTER V. AUTOMATIC HANDLING OP INFORMATION 

Information the basic material handled in office operation 

In the office the basic material being handled is information. As business 
grows more complex the need for more and better up-to-the-minute information 
grows almost in geometric progression. As an index of the increasing burden of 
gathering and transmitting information which comprises office operation between 
1920 and 1950 there was a 53-percent increase in the number of factory workers 
against a 150-percent increase in the number of office workers. This is also 
an index of the great need for mechanization of office operations. 

Linking plant and office 

The new closed-loop or feedback servomechanisms promise more than merely 
mechanizing office operations, important as that may be. Actually, the new tech¬ 
nology opens the way for directly linking office and factory, headquarters and 
branch offices. With proper analysis and rethinking of requirements and func¬ 
tions much of the routine manual recording of production data, recopying, 
transmitting and eventually transferring it to punched cards should be eliminated. 

This chapter suggests the kind of basic analysis necessary for automation of 
office operations and for making possible the close linking of office and plant, 
or headquarters and branch offices. It has already been pointed out that 100 
percent automation may be impossible or uneconomical in some present pro¬ 
cedures. But automatic performance of the same function in a different way 
may be entirely possible. 

Specially designed machines 

For example, the automatic message accounting system developed by Bell 
Telephone Laboratories represents automation of a complicated paperwork opera¬ 
tion. The device, in connection with the dialing system, will eliminate the need 
for long-distance operators and for their clerical work. 

Development of standard electronic machines 

Considerable research has been done on standard-type small electronic com¬ 
puting machines suitable for office use. Both IBM and Remington-Rand have 
developed small electronic computers or calculators as control units for punched 
card office machinery. The computers provide automatic programing for office 
machinery and speed up many normal accounting procedures. They are being 
used for rapid handling of income-tax returns, compilation of payrolls, deter¬ 
mination of stock balances, sales and price and many other complex accounting 
procedures. When properly used such equipment has greatly speeded accounting 
operations and often has halved the time by which accounting and statistical 
reports are placed in the hands of management. 

Both computers illustrate the way in which standard but flexible functional 
units can be individually adapted to varying needs of users. 


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In addition to the large companies mentioned above, there are many smaU 
companies currently offering computing equipment suitable for business use. 
Many of these are listed in this book and reference is made to other sources 
for additional listing. 

Analyzing Office procedure 

The need for skillful and careful analysis of office procedures as a basis for 
computer programing Is recognized by all who have given serious thought to 
the business use of computing mechanisms. Every action, every decision must be 
reduced to a series of simple, logical steps which, properly coded, will be mean¬ 
ingful to the computer. The more detailed the original programing analysis, 
and the more alternatives permitted in the original programing, the easier is 
the task of introducing new data. 

Much has been done, by computer manufacturers, to train and aid potential 
business users of such equipment in analyzing and programing office operations. 
But there has been little recognition of the fact that the computer and computer 
techniques make possible an entirely new approach to the information-handling 
problems of business. Rethinking of information-handling and processing opera¬ 
tions is necessary to get maximum benefits from new technological developments. 

Unit operations analysis 

Our clerical procedures have been designed largely with reference to, and 
in terms of, liuman limitations. The new closed-loop computing mechanisms offer 
freedom from those limitations. But freedom from those limitations require 
procedures analysis and creative thinking which will classify processes in terms 
of elemental functional units common to various operations. Only such analysis 
will permit an entirely different way of handling business information with the 
new type of machines. 

The office of the future 

In a great many instances, the office of the future will receive information 
gathered and transmitted directly from the point of operations generating the 
data. 

Production scheduling and production controls will be entirely automatic. 
The way has already been paved for this development. Electronic computers 
not only will compile the process data now being processed by punched-card 
systems, but they will also determine optimum scheduling of all productipn 
machines. This can be done on the basis of criteria already programed 'for 
the machine. 

A machine you can purchase today 

Lest all this seems too unreal, there is a computer available to industry costing 
$15,000 (at the time the book was written) for determining production schedules 
and operators* pay allowances. Although now being used to schedule production 
for manually operated, semiautomatic machines, it performs the same basic tasks 
as will be performed by the production planning portion of the central computing 
mechanism of the automatic factory. 

Automatic ordering and inventory control 

With automatic information-handling equipment the machine can simultane¬ 
ously produce lists of required materials as production runs are determined. 
With proper programing of the machine these requirements can be automatically 
reproduced on requisition forms. 

Taking physical inventory on an automatic basis is less feasible because there 
is no foreseeable development, likely to be realized in the near future which will 
allow physical counting of assorted items to be placed on a fully automatic basis. 
The answer would, therefore, be some probability measure to adjust for pilferage 
and other changes in inventory due to causes other than authorized withdrawals 
or acquisitions. 

The problem of exceptions or the special case 

Exceptions to routine of a fully automatic plant or office need not make neces¬ 
sary a duplicate set of paper records. Legal requirements can be met by micro¬ 
filming original documents. Auditors will be able to make use of computer 
circuits as they now make use of punched card systems. With proper programing 
it is entirely possible that all of the information stored in the machine can be 
available to management on a nonrecurring basis. 


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Tube failure 

Tube failure and power failures are occurrences of normal operations of elec¬ 
tronic computers. They need not disrupt operation or erase all record of them. 
First, it is possible to use preventive maintenance with tubes. Power failure 
can be offset by arrangements currently in use in many plants and institutions. 

As transistors replace vacuum tubes, the problem of failure will be greatly 
diminished. 

Human errors occurring in introducing information into computer circuits 
are at least as serious as problems of tube failure. Yet the system can be 
designed to minimize the consequences. 

Introducing information into the computer 

This is one of the very real and critical bottlenecks to wider industrial use 
of closed-loop electronic computing circuits. These computers are useful partly 
because they operate at very high speed—the speed of electricity. Their effective¬ 
ness is materially reduced if information must be introduced at tbe speed of 
humans and if information cannot be taken from the circuits except by Slow 
typing and printing. 

The real problem is to eliminate the need for the typist. Much experimental 
work is being done in the direction of a mechanism which could read a letter 
or invoice or parts list and automatically code the information into the computer. 
Considerable progress has already been made. An experimental model Analysing 
Header has operated at the very slow speed of one character per second with an 
approximate error rate of 4 percent. It is expected that the commercial model 
will operate at speeds exceeding 100 characters per second. 

More useful information for management 

Businessmen whose desks and briefcases are already crammed with informa¬ 
tion they do not have time to digest are likely to shudder at the prospect of the 
new technology providing much more information. But the computer can be 
used to make many comparisons now made by executives in analyzing statistics 
and they can belp management get away from wanting more information since 
they can facilitate more meaningful planning and consideration of alternative 
lines of action. The computer can answer the “What would happen if * * *?” 
questions that cannot now he answered. Computers can analyze and report end 
results of projected operations set up by management according to various 
hypotheses or alternatives. 

But before Ijomputers can be used eeffectively for such analytical or other 
business functions, considerable analysis must be made of the nature and role 
of information in modern business. What is needed is analysis in terms of 
(a) whether the information originates outside of the firm or is generated by 
Internal operations and (6) tbe functions common to the processing and use of 
different kinds of information—similar to unit operations analysis. The sort of 
analysis of information requirements is not easy and involves many conceptual 
problems. 


CHAPTER VL WHAT WILL AUTOMATION MEAN TO BUSINESS I 

Some specific questions 

Questions frequently asked about the specific import of automation on business 
are : Can small business take advantage of automation? How will tbe increas¬ 
ing importance of engineers change their status within the firm? What about 
labor displacement? What chance is there to automatize when a firm’s labor 
is organized? 

General answers to these questions have little real meaning; the specific cir¬ 
cumstances surrounding each case—the economic and political environment, the 
people concerned—will determine the applicability and effects of automation in 
each case. Yes, the fact that automation is not new, but a continuation of a long 
trend means that we can learn by observing Indus toy and its course during the 
last generation. 

Labor resistance 

Perhaps the most pressing problem growing out of automation is that of 
labor resistance. When automation makes obsolete a specific human skill it 
works a hardship on the individual laborer who is displaced. In these cases 
automation will be vehemently opposed. Yet, there is a growing realization cm 
the part of businessmen that some of the responsibility for retraining and re- 


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storing the earning power of displaced workers lies with management as well as 
with the worker. Becognition of the problem, acceptance of a fair share of re¬ 
sponsibility for working out a cooperative solution and establishing good man¬ 
agement-labor relations will do much to ease the knotty labor problem involved 
with automation. 

The role of engineers 

In the face of existing shortages in the supply of engineers, automation will 
tend to increase still further the demand for engineers and it may well speed 
the placement of engineers in more general management positions. This will 
place a further burden on our educational system. More than ever, engineers 
must be given the basis for increased social understanding of the business con¬ 
text in which they work. This understanding must be far more thorough and 
acute than is possible to develop on the basis of the customary “survey” courses 
frequently required for engineers in current curricula. 

What future for small business t 

With reference to effective analysis of small firm’s operating procedures 
and changes necessary to make theirs suitable to automatic installations—past 
and present practice in the capital goods industry indicates that some assistance 
will be available from equipment manufacturers. In addition, reliable consulting 
firms can do much of the analysis required. 

Actually, developments such as the General Electric record playback give 
promise that automation may well enhance the competitive and relative position 
of small companies. 

Industrial concentration 

Will automation strengthen the trend toward industrial concentration for 
reasons other than research and development problems? Will the capital re¬ 
quirements of automation be so great that the small manufacturer will not be 
able to afford an automatic plant? 

On the basis of past experience the answer to these questions is at least a 
qualified “no.” Furthermore, electronic control devices and computers are al¬ 
ready available at prices that most businesses can afford, assuming they can put 
the machines to productive use and do some financial planning. 

The fact, moreover, that automation requires less direct labor means that 
automatic plants need not be placed in concentrated labor markets. 

As flexible automatic equipment is developed it will be possible for smaller 
concerns to operate very effectively in competition with, or as efficient sup¬ 
pliers to, large companies. 

One problem, not confined to small companies, demanding early attention, 
lest it hinder effective and rapid technological advances promised by automation, 
is the tax treatment of corporate depreciation. Current depreciation allowances 
hinder effective and rapid technological growth of our corporations. 

CHAPTEB vn. SOME SOCIAL AND ECONOMIC EFFECTS OF AUTOMATION 

It is clear that any technological development such as automation will have 
important economic and social repercussions. A reasonable analysis of the 
probable changes which will result from automation should be preceded by an¬ 
swering two important questions: 

How far will automation progress? 

How fast will it take place? 

The gist of the chapter is that it does dispute the extravagant claims at 
certain writers. It urges sound thinking and writing about the effect of tech¬ 
nological change on human society and deplores predictions of debasement of 
the human race. 

Limiting factors 

Automation will not progress as far as the proponents of a completely auto¬ 
matic society have predicted. 

The most reasonable expectation is that medium to long runs of similar prod¬ 
ucts will be susceptible to automatic or largely automatic production. 

The new technology will allow the development of new kinds of individual 
automatic or semiautomatic machines, but the product will still have to be 
moved from one machine to another. It is unlikely that automatic materlals- 
handling systems can be employed economically unless a reasonably long run is 
expected. 


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The use of a device similar to General Electric’s record playback control may 
make it possible to extend automation to many job-shop operations, but the gains 
do not promise to be as great as with other “taping” procedures. 

Automation will be limited where human interaction is of primary importance 
as in distribution, service businesses and in professional fields. 

Automation and employment 

Automation can and will seriously affect employment in those fields in which 
it is practicable, particularly certain areas of manufacturing. But manufactur¬ 
ing does not account for the major portion of our employment. Further, auto-; 
mation will be possible only in some of the manufacturing industries and, even 
in these, a large number of workers will still be needed. Automatic factories 
will not be workerless factories. Many hundreds of maintenance men will be 
required. 

Repetitive office work, when in sufficient volume, will probably be put on a 
partially automatic basis. Very few offices will be entirely automatic. Even in 
the most automatic factories and offices, taping the machines, in addition to main¬ 
tenance, will require many people. Furthermore, such day-to-day work as 
answering correspondence and personal calls will still require humans. 

Wholesaling and retailing 

In distribution, where human intervention is of primary importance, auto¬ 
mation will be limited to specific areas of application. An excellent example 
is in the field of automatic retailing. Examples are given. 

Magnitude and rate of change 

It is difficult to predict how far automation will progress either with respect 
to its effect on employment or the number of firms that will use automatic equip¬ 
ment. Yet the types of industry least likely and most likely to be seriously 
influenced by automation can be suggested. 

Although they will use automatic machines, agriculture, trade, service, con¬ 
struction, mining, and the professional field will not be automatized. 

The field of industry most susceptible to automation are: bakery products, 
beverages, confectionery, rayon, knit goods, paperboard containers, printing, 
chemicals, petroleum refining, glass products, cement, agricultural machinery, 
miscellaneous machinery, communications, limited price retailing. These indus¬ 
tries employ only about 8 percent of the total labor force. 

The labor shifts that could be expected from these changes and the time span 
during which they are likely to occur will probably be no greater than the popu¬ 
lation shifts which occurred during the 1940’s. This comparison emphasizes 
the fact that the nature and the rate of population shifts due to automation will 
be of a magnitude with wjiich we are able to cope. 

Automation must be viewed in proper historical perspective as a new chapter 
in the continuing story of man’s organization and mechanization of the forces 
of nature. It raises new problems. It solves some of the problems, human as 
well as mechanical, that were raised by earlier phases of mechanization. 

Debasement of the workerf 

Perhaps the most vehement objection to industrial use of automatic controls-^ 
and indeed any form of mechanization—is the charge that machines debase the 
worker still further. But when the condition of labor in today’s plants is con¬ 
trasted with the condition of labor in the past, the burden of proof is surely 
put on those who decry modern industrial development. 

Although automation will bring its own problems, it provides the answer to 
the human problem of machine pacing and subordination of the worker to the 
machine. 

Automation makes possible machine performance of the repetitive work of 
industry. The worker will be released for work permitting development of his 
inherent human capacities. 

The work, under automation, which will require the most manpower will be 
semiskilled and highly skilled maintenance, repair, and operation. Such work 
is fully within the ability of most people who today work at the simply repetitive 
tasks of the assembly line, provided they are properly trained and motivated. 
The maintenance and repair jobs will require a different set of abilities than 
are needed for engineering and design. A high level of theoretical comprehen¬ 
sion is not so important in these tasks as are genuine interest in the work, desire 
to do good work, and ingenuity. 


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In an odd and entirely unexpected way, automation may bring us back to the 
human and phychological values of the self-respecting craftsmen whose alleged 
demise the professional mourners decry by wailing and bawling "debasement.” 

Mr. Diebold. The need to assess the rate of speed and the need for 
factual information is, I think, very pressing at the present time. 
Automation is too much of an issue. There is too much loose talk 
about what it means. I think a close and hard look at the facts is 
called for. It seems to me that one of the facts about automation that 
should be emphasized is that it makes possible new levels of achieve¬ 
ment. It is possible to do new things. This has been the case, I think, 
with all of our mechanization and all of our industrial development. 
I think it should be recognized in the case of automation. For exam¬ 
ple, we could not have our atomic program if it were not for self¬ 
regulating controls. No human could operate hand controls deep 
within the central part of the reactor. It would be difficult to have 
such simple materials as polyethylene (the material from which 
“squeezing bottles” are made) without self-regulating controls. The 
precision must be so exquisite in the manufacture and timing of many 
such chemicals that it is impossible to manufacture them at ml without 
self-regulating systems of control ? without automation. 

In the office it is possible to achieve a much higher level of control 
of operation, to know much more about what is happening, to cut 
down on the waste of our natural resources by the use of automation. 
It is a means of optimizing production. It makes it possible to do 
things that you could not do before, in addition to doing the things we 
have been doing more efficiently. 

It seems to me that the education requirements posed by automation 
are very important, and I hope that that is one of the areas that you 
will question very aggressively during the next few weeks. The re¬ 
quirements for education are twofold. Most obviously there is a need 
to train people in this new field. The type of work that people will 
be doing is changing.. The nature of jobs continually changes, and 
automation is merely introducing a new set of requirements for the 
particular kinds of skills that will be needed over the course of the 
next 20 years. I think it is important that we study these factors, 
project, and forecast requirements to see that our education system 
matches *these requirements and turns out people for the kind of 
world in which they will live, rather than for the kind of world in 
which their teachers have been living. 

It seems to me the second requirement for education raised by auto¬ 
mation is that automation is very clearly going to increase the leisure 
time that we have. This has been going on for many years. It is 
going to continue, and it may continue at an accelerated rate. We are 
very clearly going to have an increased amount of leisure. I think 
considerable attention must be given to our education system to see 
that we use this leisure creatively, that it is used in a manner that 
benefits all of our society. 

I think there is a question of whether automation requires any 
special legislation, whether it is necessary to establish a particular set 
of controls, because of automation. My answer to that would be I 
do not think it is. I think that automation emphasizes, underlines, 
and perhaps makes more important, a number of the economic condi¬ 
tions that already exist in the country. It clearly makes changes, for 

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example, in the manner in which businessmen decide upon their level 
of output. If you have a high investment in machinery, and you are 
faced with the question of cutting down on your output, I think it is 
an interesting question to raise, whether the depreciation charges on 
the machinery may not far outweigh the direct charges of continuing 
to produce. This may be a factor against cutting down and fluctua¬ 
tions in output. I think there are obviously many complex economic 

f roblems in this area. I have tried to outline some in the document 
submitted for the record. 

There are many things that business can do in areas where automa¬ 
tion does mean a change in employment. In specific instances where 
automation would mean a shift of workers to other types of jobs, it is 
very clear that considerable care should be given to the manner in 
which automation should be introduced. I have tried in my earlier 
remarks to indicate that this is not universally the case. There are 
many areas where you do new things with automation and you are not 
simply replacing jobs. You are replacing activities that people have 
done before. However, where you are mechanizing operations that 
have been done by hand, it is obviously very important to coordinate 
the hiring policies of a firm, to see that individuals do not bear the 
brunt of these changes. 

A considerable reappraisal by business of the procedure for intro¬ 
ducing automation, is, I think, going on in many firms. I am per¬ 
sonally acquainted with very few cases where there have been any 
layoffs due to automation. It has been primarily a case of people 
shifting their type of job within a firm, and in many cases, of course, 
there was considerable advancement and increase in the number oi 
people in the operation in order to make use of the new equipment. 

A number of basic questions are posed by automation, questions of 
economic theory, the way we measure productivity. Is it meaningful 
any more to measure productivity in terms of direct labor if the direct 
labor content in manufacturing is decreasing? A reappraisal of our 
traditional economic distribution theory seems to be called for, in 
the light of the change in these factors. 

The very impact of automation on cost accounting, on the methods 
that we use for distributing costs within a firm—there are many man¬ 
agement areas where automation is introducing changes in <our con¬ 
cepts, our ways of thinking about management. The organizational 
structure of business is starting to shift. If you can concentrate the 
data processing of a business in one area, if you can change the speed 
with which you can get information, you begin to change the organi¬ 
zational structure of a business. This makes for many changes in the 
requirements of what people are doing in firms. It again calls atten¬ 
tion to education, and to the areas where it is necessary to understand 
precisely what is happening. 

Automation will liave some impact on underdeveloped areas. I 
think that is an area that should be studied. A final point I would 
like to make is the question of the nature of working environment 
of individual workers in a plant or office. Mechanization introduced 
the machine pacing of workers, I think this has been brought out ixi ; 
many cases. There have been a number of studies of why there are 
psychological problems and unrest on the part of workers engaged 
in mass production operations. It is, to a large degree, machine pac¬ 
ing—workers having to keep up with machines. Automation changes 


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that environment. It is no longer a question of the machine pacing 
the man in his job. Instead of a man putting a part in the machine 
and having the machine do the actual work and the man then taking 
the part off, we are doing this automatically. You change the char¬ 
acter of the job. You put more emphasis on maintenance, on jobs 
that are less routine, and more fulfiling. 

I think there are many other important questions raised by auto¬ 
mation, but I would like to stop my presentation at this point to an¬ 
swer any questions that you may wish to ask. 

The Chairman. Mr. Diebold, if it is satisfactory with you and 
Professor Buckingham, I wish you would just keep your place there 
and let Professor Buckingham come around and after he concludes 
you can ask each other questions if you would like and we would also 
like to ask each one of you questions. 

Mr. Diebold. Fine, sir. 

The Chairman. One question I had in mind is about the relative 
importance of automation on small busines and big business, the work 
length, and length of hours of week and things like that. 

I would like to withhold them until Professor Buckingham has 
given his statement, so that you gentlemen can each one ask questions 
and also we would like to ask questions. 

Professor Buckingham, associate professor of industrial manage¬ 
ment at the Georgia Institute of Technology, is one of the several 
persons on this program who also spoke at the CIO national confer¬ 
ence on automation last April. 

The subject of the paper which he delivered at that time dealt with 
the industrial significance of automation. Since the significance of 
this movement to the present and future of our economy is precisely 
the interest of this subcommittee, I am sure that Professor Bucking¬ 
ham’s remarks will help us to get the general setting of the problem 
before going into the various case studies this afternoon and during 
the next 2 weeks. 

Professor Buckingham ? 

STATEMENT OF WALTER S. BUCKINGHAM, JR., ASSOCIATE 
PROFESSOR, GEORGIA INSTITUTE OF TECHNOLOGY 

Mr. Buckingham. Thank you, Mr. Chairman. I also wel¬ 
come the opportunity to appear before this subcommittee, and add 
what I can to the Statements which have been made and will be made 
in the future. 

I think it was Oliver Wendell Holmes who once said that, to be 
learned, one must study, to be alert, one must speak, to be exact, one 
must write. 

I think there is a great need for precise and quantitative thinking 
in this field, and this is what has prompted me to submit a written 
statement, which I hope the subcommittee will indulge in for a few 
minutes. 

It also will have the advantage of keeping me from backing out 
later on anything that I may have said. 

Although I am from Georgia Tech, I am neither an engineer nor 
an athlete. I speak for myself only ? and as an economist, which is the 
only profession which I lay any claim to. 


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This brief statement which I have presented here, or will present is 
designed to explore the main avenues of the economic consequences of 
automation, and assist, I hope, this committee in asking the right 
questions to the expert witnesses who will follow; the witnesses who 
will be able to supply the necessary factual information. 

Since World War II some spectacular discoveries in the fields of 
electronics and communications have permitted the manufacture of 
various types of automatic computing machinery. These machines 
are capable of translating a large body of previously developed, 
theoretical, economic, and business principles into practical signifi¬ 
cance. Called electronic computers, they are capable of processing 
data with almost unbelievable speed. When information is fed into 
them, usually on tapes, they can perform a series of logical operations 
and can choose among several previously anticipated courses of action 
based on built-in criteria. They can even adjust automatically for 
errors. The operation of these computers to solve scientific or com¬ 
mercial problems is often referred to as automation. 

Also, in the last few years a number of automatic or semiautomatic 
machines have been constructed to supplement conventional assembly¬ 
line operations in factories. These machines perform hundreds of 
individual mechanical functions without direct human intervention. 
The operation of these machines is likewise commonly called auto¬ 
mation. 

Finally, scientists, computer manufacturers, and science fiction 
writers have shown, hypothetically at least, how the administrative 
and manufacturing processes of an enterprise could be integrated into 
a single, silent, automatic monster which could grind out an endless 
chain or products without a man in sight. This awesome picture has 
charged the imagination of some and struck terror in the hearts of 
others. The possibility of such developments is also called automation. 

In addition to this definitional confusion many speculations, 
hypotheses, and fragments of theories concerning the broad economic 
ana social implications of automation are currently being expounded. 
In this flood of verbiage there is no shortage of imagination, but there 
is a notable lack of the hind of critical thought and careful documenta¬ 
tion which yields quantitative, scientifically accurate results. There 
is a great need to collect, sift, classify, and evaluate the empirical 
evidence which alone can test tnese generalizations. 

It is not the purpose of this presentation to provide any conclu¬ 
sive, concrete facts or to try to verify any particular arguments by 
amassing evidence. Rather, the main purpose here is to try to estab¬ 
lish a frame of reference within which the results of subsequent 
empirical investigations can be logically fitted so as to determine the 
probable impact of automation on employment and economic stability. 
Some facts will be used here to illustrate problems which require study 
but this statement will seek to achieve its main purpose by presenting 
(1) a definition of automation based on four basic principles which 
underlie all of the various popular concepts, (2) an estimation of the 
probable scope and speed of automation in tne future, (3) a classifi¬ 
cation of eight major types of direct effects of automation, and (4) 
an evaluation of the impact of these effects on five principal tests of 
the performance of an economic system with particular emphasis on 
the maintenance of full employment and economic stability. 


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PRINCIPLES AND DEFINITION OF AUTOMATION 

The variety of popular uses of the term “automation” necessitates 
some definition which is both precise and relevant for analysis. Such 
a definition can best be derived from an examination of the major 
principles which underlie most if not all of the popular concepts of 
automation. These are four such major principles—mechanization, 
feedback, continuous process, and rationalization. 

Mechanization means the use of machines to perform work. Some¬ 
times mechanization substitutes machinery for human or animal 
muscle. The steam engine did this. Sometimes mechanization sub¬ 
stitutes machinery for brainwork at the lower, routine levels. The 
electronic computer does this. Because of the power, compactness 
or speed of machine operation, mechanization usually permits tasks to 
be performed which could never be done by human labor alone no 
matter how much labor was used or how well the enterprise was 
organized and managed. Mechanization increases wealth and re¬ 
duces drudgery in the long run but in the short run it may cause 
hardships to workers whose skills are rendered obsolete, diluted by a 
further specialization or whose jobs are abolished altogether. 

Feedback is the second principle inherent in automation. This is 
a concept of control whereby the input of machines is regulated by 
the machine’s own output so that the output meets the conditions of 
a predetermined objective. As in a simple, thermostatically con¬ 
trolled heating system, the conditions created by the output auto¬ 
matically control, in turn, the amount of input and hence the per¬ 
formance of the machine. When controlled by the feedback prin¬ 
ciple, machines start and stop themselves and regulate quality and 
quantity of output automatically. 

Continuous flow or process is the third principle of automation. 
This concept is of increasing importance because it is spreading from 
many individual production processes to the business enterprise itself 
and on to the entire economy. Mass production, increasing interde¬ 
pendence and now automation all embody this principle which is lead¬ 
ing to a concept of the business enterprise as an endless process. 
Business for the most part has ceased being an operation that can be 
started and stopped with small loss. The regulation of a constant 
flow of goods has become a major concern of management. 

This continuous-process idea has changed the function of manage¬ 
ment. The man of daring and imagination who relied on hunch sup¬ 
ported by experience has become a technological casualty. Tne 
shrewd bargain has given way to the carefully calculated risk. The 
increasing size and complexity of business enterprises precludes the 
top executives from having knowledge of the details of the firms’ 
operations. 

Decisions must be made by groups who rely on reports from the 
sales, production, accounting and other departments. Top executives 
today are forced to view their functions as consisting of planning, 
controlling and coordinating the firm’s operations ana harmonizing 
the interests of the firm with those of employees, investors, suppliers, 
and customers. Because of the high degree of interdependence m the 
economy the decisions of these executives intimately affect the lives 
of millions of people. 


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Rationalization, the fourth principle of automation, means the 
application of reason to the solution of problems or to the search for 
knowledge. 

In a production system it means that the entire process from the raw 
material to the final product is carefully analyzed so that every oper¬ 
ation can be designed to contribute in the most efficient way to the 
achievement of clearly enunciated goals of the enterprise. 

Actually, rationalistic philosophy is nothing new, having become 
an important force in the world with the Renaissance. However, the 
scientific, rationalist philosophy takes on numerous new implication? 
when it can be implemented by modern electronic machinery. The 
rise of electronic computers has led to a fascination with the possibil¬ 
ity that superrationalism in the business and scientific spheres might 
spill over and transform society into an exact mechanism in which all 
elements of chance, risk, capnciousness and free will, as well as all 
spiritual values, would be eliminated. Although this kind of specu¬ 
lation is highly dubious nevertheless it is one logical extension of this 
fourth principle of automation. 

Following these four principles—mechanization, feedback, continu¬ 
ous process and rationalization—automation can be given a definition 
precise enough to be useful for logical analysis. It can be said to be 
any continuous and integrated operation of a rationalized production 
system which uses electronic or other equipment to regulate and co¬ 
ordinate the quality and quantity of production. 

THE SCOPE AND SPEED OF AUTOMATION IN THE PUTUBE 

For the purpose of determining the extent to which automation 
can be applied to productive processes, industries can be divided into 
three groups. The first includes those industries in which production 
can be reduced to a continuous flow process. Oil refining, flour mill¬ 
ing, and chemical production are illustrations of industries in which 
automation has made, and should continue to make, significant 
progress. In other industries, it is possible to revamp the productive 
mechanism in such a way as to convert it from a series of unit opera¬ 
tions into a single endless process. While some industries utilize 
processes which are not conducive to automation, new methods of 
productiqn may be conceived which are more acceptable. 

A second class includes industries in which some automation is 
possible, but full or nearly complete automation is not likely. Indeed, 
it is possible that some industries may have automatic machines ap¬ 
plied to 75 percent of their operations, yet the cost of making the plant 
completely automatic would more than offset the savings achieved 
from the use of partial application ofautomatic machines. In this 
category would be found industries which require substantial informa¬ 
tion-handling and accounting functions but in which the method of 
production or the nature of the product is not adaptable to con¬ 
tinuous flow techniques. Such industries would include transporta¬ 
tion, large-scale retailing, and the manufacture of certain non- 
standardized consumer products like furniture. 

The third group into which all industries may be classified includes 
those in which no significant application of automation seems likely 
because of the highly individualistic nature of the product, the need 


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for personal services, the advantages of small-scale units or vast space 
requirements. These would include agriculture, mining, profes¬ 
sional fields, and most construction and retailing. 

Other limitations on the scope and speed of automation are more 
temporary but are nevertheless significant at the present time. These 
include (1) the high initial cost of the equipment which for the time 
being at least prevents all but the larger firms from using it, (2) the 
Shortage of highly trained operators and analyzers, and (3) the time 
required to analyze the problems, reduce them to equations, program 
the computers and translate the answers into useful data. The solu¬ 
tion to the problem of rethinking through the entire production 
process is likely to come slowly because of the tremendous mental in¬ 
ertia which is confronted in such cases. 

DIRECT EFFECTS OF AUTOMATION 

Following the principles and definition of automation already de¬ 
rived, the direct consequences of applying automation to a produc¬ 
tive system can be classified as follows: 

1. Many direct production jobs are abolished. 

2. A smaller number of newer jobs requiring different, and mostly 
higher, skills are created. These new jobs include equipment main¬ 
tenance and design, systems analysis, programing and engineering. 

3. The requirements of some of the remaining jobs are raised. For 
example, the integration of several formerly separate processes and 
the enhanced value of the capital investment increase the need for 
comprehension and farsightedness on the part of management. Also, 
greatly decreased inventories and more rapid changeover times create 
tensions which require more alertness and stamina. 

4. Production in aggregate and per man-hour is enormously in¬ 
creased. 

5. The production of new and better goods of more standardized 
quality becomes possible. However, there may be a loss of variety. 
Many different models are possible from combining a few standardized 
processes in different ways but, as in automobiles, the final products 
are still likely to look pretty much all alike. 

6. There is an increase m the quantity and accuracy of informa¬ 
tion and the speed with which it is obtained. Management can thus 
have a clearer picture of its overall operation and by knowing the con¬ 
sequences of alternative courses of action it can act more rationally. 

7. In most cases a more efficient use is made of all of the components 
ofproduction—labor, capital, natural resources, and management. In 
a few cases, high operating speeds waste materials, but even here the 
loss is usually justified by saving other resources including even time 
which is a valuable component of production. 

• 8. A continuous pace is often set at which the plant must be 
operated. 

IMPACT OF AUTOMATION ON THE ECONOMIC SYSTEM 

In order to determine the economic impact of the above eight major 
effects of automation they should be evaluated in terms or the per¬ 
formance tests of a properly working economic system. The criteria 


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of an economic system’s performance, or the goals which an economic 
system should seek to maximize, can be classified as follows: 

1. The level of employment of all resources. 

2. The stability of employment of all resources. 

3. The satisfaction of consumers’ desires, that is a pattern of re¬ 
source and product allocation which always satisfies the more urgent 
requirements first. 

4. The efficiency of production, that is output divided by cost in 
human effort, physical resources, and lost opportunities. 

5. Progressiveness, that is the rate of increase of productivity. 

Of course, these goals cannot all be increased simultaneously. For 
example, maximizing, short-run aggregate living standards (No. 3) 
requires a more or less equal distribution of income if it is assumed— 
and it cannot be proved otherwise—that different people have the same 
basic needs and the same capacities for enjoyment. 

Now equal income distribution, and hence maximum human satis¬ 
faction, is partially inconsistent with progressiveness (No. 5) because 
some inequalities of income are necessary to provide the incentive to 
increase productivity and hence long-run living standards. Conse¬ 
quently, some optimum combination of these five goals—particularly 
some compromise between short- and long-run living standards, should 
be sought. 

The first goal, full employment, is now generally accepted as both 
an economic and a political necessity. The enormous costs of unem¬ 
ployment, particularly of labor, have been well documented. Human 
resources depreciate with time rather than use, and they depreciate it 
an accelerated rate when they are unemployed because of the decline 
of knowledge, skills, and morale. The main economic cost of unem¬ 
ployment is in production that is permanently lost. 

However, the social costs of unemployment far exceed the economic 
costs, since unemployment also contributes in large measure to crime, 
disease, family disintegration, race and religious prejudice, suicide, 
and war. 

It is on the employment of labor that automation has its greatest 
impact. A recent doctor of philosophy dissertation by David G. 
Osborn at the University of Chicago revealed that in 12 cases of auto¬ 
mation ranging from chocolate refining to railroad traffic control the 
reduction in employee requirements ranged from 13 to 92 percent with 
an average reduction in employment of 63.4 percent. In the oil-re- 
fining industry employment has fallen from 147,000 to 137,000 in the 
last 7 years although output rose 22 percent. The Federal Reserve 
Index shows that production in mining and manufacturing was about 
the same at the end of 1954 as at the beginning, but total employment 
in these industries was down by almost a million. It is often said that 
such declines will be offset by increases in employment in the more 
dynamic sectors of the economy, but even in the eiectrical-machinery 
industry itself employment remained constant at about 1,100,000 from 
1952 to 1954. 

It is true that there have been no mass layoffs from automation, but 
this is apparently because automation has proceeded slowly enough so 
far to allow normal turnover to disguise the displacement. The worker 
displaced is not fired. He is the one who is not hired. 

Another rather subtle form of displacement is in the so-called hid¬ 
den unemployment of downgrading. It is true that automation 


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creates a demand for hew skills of a higher order and no doubt there 
will be a long run upgrading of the labor force. However, because 
automation renders many skills obsolete and dilutes other skills by a 
further division of labor, and since the new skills require extensive 
training and education, workers may not be able to move easily into 
the new jobs. When they cannot, they are often downgraded in work 
even though their pay is not reduced. 

There is further evidence of this lack of upward labor mobility in 
the critical shortage of engineers and other highly trained specialists. 
The United States will graduate 27,000 engineers and 50,000 tech¬ 
nicians in 1956 compared to 45,000 engineers and 1,600,000 technicians 
of comparable quality who will be graduated in the Soviet Union. 

A recent National Science Foundation study shows that out of the 
upper 25 percent of high-school students about half are unable to go 
to college and another 13 percent drop out before finishing college. 
Thus, nearly two-thirds of those with the greatest potential for scien¬ 
tific leadership never receive a college education. Less than one- 
quarter of 1 percent of these ever continue their education through to 
the doctor of philosophy. 

Industrial location is affected by automation and this, in turn, 
affeets employment. There could be a shift in labor-oriented indus¬ 
tries away from low-labor-cost regions for two reasons: First the 
smaller labor force reduces the savings from lower wages and, sec¬ 
ond, there is a smaller wage differential between skilled workers of 
different regions than between the unskilled and it is the more highly 
skilled workers who are likely to be retained if automation is intro¬ 
duced. For example, the new corn-products plant at Corpus Christi, 
Tex., was located in an area which normally would not supply a large 
skilled labor force. However since automation reduced the impor¬ 
tance of a large labor supply this plant could be located closer to its 
markets and its sources of raw materials and fuel. 

Since automation will be limited to industries which now employ 
only about 25 percent of the labor force, and because automation 
creates many new jobs for which the necessary education and training 
will delay the entry of young people into the labor force, there would 
appear to be no reason to fear long run, mass unemployment. How¬ 
ever, there is no automatic regulator in the economic system that 
guarantees full employment and the advantages of automation can 
be insured only if there is a continued expansion. As automation 
advances in our basic industries the American economy becomes like 
a rocket which must continue to accelerate or else fall from the sky. 
This leads to the next criterion of successful economic performance 
the necessity for"economic stability. 

Here also the long-run outlook is good but the short run poses 
problems. In general, there is no more reason to expect a re¬ 
currence of the depression conditions of the 1930’s than there is to 

3 set another epidemic of smallpox. In both cases the causes are 
known and the remedies are effective if they are applied. How¬ 
ever, automation makes the need for vigilance all the more imperative 
because it has unstabilizing effects in the short run just like the 
original industrial revolution had. By greatly increasing the fixed 
cost of the plant, and setting a continuous pace at which it must be 
operated, tne adverse consequences of shutdowns are magnified. 


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Unfortunately, the very increases in efficiency and technological 
progressiveness which automation brings are a potential threat to 
continued stability. The abundance of production itself which in¬ 
creases living standards also frees people from spending all of their 
income unless they so desire. Whenever basic necessities can. be 
secured by most people with only a part of their incomes, full employ¬ 
ment becomes precarious because prosperity is then sustained by that 
portion of total spending which is dependent on confidence rather than 
on physical needs. A prosperous economy is always potentially un¬ 
stable in the sense that small changes in expectations can have magni¬ 
fied effects. 

The costs of instability, however, are large for everybody. The 
businessman must maintain expensive inventories and hedge against 
price changes, if possible, or else take great risks of loss. The cost 
to the worker, however, is the greatest of all from a personal stand¬ 
point because he lives from day to day and thus he suffers first, and 
most acutely, when his income falls. It is clearly the responsibility 
of businessmen and the Government—since they are the basic economic 
decision makers of the country—to insure as high and stable a level 
of production and employment as possible. 

The third criterion of economic performance—maximum satisfac¬ 
tion of consumers’ desires—seems to be well met by automation. 
The great increase in output and improvement in quality of goods is 
bound to raise living standards if full employment is maintained. 
There are a few danger spots even here, however. A wealthy economy 
like the United States must continue to be reasonably equalitarian 
because its prosperity depends on mass purchasing power. If the 
benefits of automation are not shared with workers in the form of 
productivity wage increases and with consumers in the form of lower 
prices these mass markets will be threatened. 

There is an additional need for maintaining a high level of con¬ 
sumption. This is because automation does not seem likely to create 
the great waves of primary and secondary investment that earlier 
technological developments did. The automobile, for example, stim¬ 
ulated vast investments in the oil, rubber, highway, and construction 
sectors of the economy. If the electronics industry does hot call forth 
such secondary investment, consumption will need to rise to fill the gap. 
The 4th and 5th criteria of economic performance, efficiency and 
progressiveness, are both well met by automation. By its very nature 
automation increases productivity and accelerates technological prog¬ 
ress. In the University of Chicago study referred to above, produc¬ 
tivity increases in 12 cases of automation ranged from 14 percent to 
1,320 percent in a case of office automation with the average for all 
cases being 382 percent. Space requirements alone were reduced from 
12 percent for printed circuit fabrication to 94 percent for lard render- 
ing with an average for all cases being 59 percent. 

Whatever the snort-run maladjustments and conflicts may be, auto¬ 
mation favors the long-run improvement of economic well-being. 
America’s high living standards are not due to any monopoly of 
knowledge, brainpower, or, industriousness. They are due largely 
to the enormous amount of capital equipment which both sides of 
industry, management and labor, have with which to work. This 
capital increases efficiency and automation accelerates the process. 


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CONCLUSION 

Although automation rides the wave of the future it is understand¬ 
able why workers and consumers should be concerned. Our leaders 
of industry, who are men of vision, are also men of wealth and posi¬ 
tion who can afford to take the long-run view. But the rest of us 
live in the short run, unfortunately, and that is where the potential 
dangers lie. A high degree of public responsibility from the leaders 
of industry, labor, and government will be required if the mistakes 
of the first industrial revolution are to be avoided. 

The Chairman. Thank you very much, Professor. 

We will be greatly benefited by this statement of yours. We also 
have Mr. Diebold’s book on automation which we are studying. I 
know we will be helped by both your statements and such other infor¬ 
mation as you gentlemen will kindly furnish to us. 

Will it oe agreeable to you, Professor, to engage not so much in a 
debate with Mr. Diebold, but in sort of a panel discussion? You can 
each one ask the other questions if you would like to do so, after I get 
through asking a very few questions. 

I would like to ask about the relative importance, Mr. Diebold, of 
automation on, we will say, small business, and again on big business. 
Would it only help big business or would it help small business too? 

Mr. Diebold. I think, Mr. Chairman, automation will very ma¬ 
terially help small business. It will make possible through a number 
of factors, through leasing of capital equipment, which is a practice 
that is becoming quite common in the automation field, ability to lease 
decreases capital requirements for business and makes it possible for 
a smaller business to obtain automation equipment. 

Through the introduction of flexible machine tools, it is possible 
for small shops to compete with some of the larger ones, to have the 
advantages of automatic operation without the large investments in 
capital equipment that the large companies undertake. It seems to 
me that automation is applicable in small industries, and makes for 

S uite effective competition—mobility of small industries is such that 

i ___i_ j •. • _• . i • _ i • ■ 1 1 •»_ 

here is a ver 
companies, 
this. 

The Chairman. Professor Buckingham, I notice you stated near 
the middle of your statement that the high initial cost of the equip¬ 
ment, at least for the time being, prevents all but the larger firms 
from using it, 

Mr. Buckingham. I think that is certainly one point of disagree¬ 
ment I would have with Mr. Diebold, although it would not he a 
basic disagreement. I think that for the time being cer tainl y these 
computers and other equipment are very expensive. We have a com¬ 
puter center at Georgia Tech with two electronic computers. We are 
going to make these services available to small firms, but the cost is 
likely to range up to $20,000 a month, so this is likely to preclude the 
very smallest from using it. However, middle-size and large firms 
can begin to take advantage almost immediately. 

I would like to disagree on one point with Mr. Diebold, and that is 
this: It is true that it is quite possible that automation will make 
possible the rise of small suppliers who can lease this electronic equip- 


think that automation 


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power in them in competing with large 
nation provides an additional tool for 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


ment and manufacture certain things for the larger firms. It is pos¬ 
sible, but it isn’t necessarily probaDle, so I think that there is a need 
for us to maintain constant vigilance in this area, to make sure that 
small firms and medium-sized firms get the same competitive advan¬ 
tages that large fully integrated firms receive. 

There is a possibility, of course, that automation will—in fact, it 
is quite likely to—-lead to decentralization of firms operations on a 
large scale. It is no longer necessary to locate your plant near the 
large population centers. The auto industry wouldn’t have to be 
Detroit. It could be some place else. However, this doesn’t neces¬ 
sarily mean that there is going to be a deconcentration of ownership. 
Decentralization and deconcentration of ownership are two entirety 
separate things. 

The Chairman. Would you like to comment on that? 

Mr. Diebold. Yes, Mr. Chairman. A large part of our work, the 
work of my firm, is concerned with the introduction of automation to 
small businesses, and I think that it is perhaps too easy to assume 
that large capital investment is required in automation. Although 
you can rent computers for $20,000 a month, these are very large 
machines. You can also rent computers for $2,000 and $3,000 a month, 
and you can lease time on computers. 

Small businesses can reduce their bookkeeping to a service bureau 
operation through the leasing of a few hours a month of time and you 
can measure that in hundreds of dollars. It can be too easy to point 
to the more conspicuous examples of automation in the large com¬ 
panies, and assume that is all you have. 

I would like to point out what I thought was one contradiction in 
Professor Buckingham’s statement. He initially said the level of 
capital investment required in automation was so large that only the 
giant companies could go into it. He later stated that it did not 
appear that automation was going to require a large capital invest¬ 
ment, and that this would therefore not have the effect of secondary 
capital investment, and the stimulating influences that it brings to the 
economy. I wonder if he would comment on that. 

Mr. Buckingham. I think there is a difference in the use of the 
term “investment” there. When a large corporation automizes—if 
that is a good term- 

Mr. Diebold. Automates. 

Mr. Buckingham. Automates—it may invest in equipment or 
Change its functions. At the same time, it is increasing investment 
in one area, it may be decreasing investment in another. The point I 
made, or try to make, was that the secondary influences are not likely 
to be as great as in earlier advances in technology. I think that the 
output of the electronics industry itself, although it has increased 
tremendously, is certainly not proportional to the output of other 
industries in the days when the railroads and the automobiles were 
first being introduced. 

Mr. Diebold. I think there are two contradictions there. I would 
like to get to the heart of this problem. One is that a general state¬ 
ment has been made—I think Dr. Buckingham commented on this— 
that the electronics industry does not typically have a large amount 
of capital investment and therefore the stimulation to the electronics 
industry that is brought about by automation is not one which will 


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result in secondary investment, and consequently a high level oi 
activity economically. 

At the same time the statement is made that the electronics industry 
is not going to result in large-scale employment increases as it grows 
because it is using a high level of mechanization. I think these are 
contradictory areas. 

The Chairman. High-salaried people will get higher salaries. 

Mr. Diebold. Also, the fact that they are introducing quite a bit 
of machinery in the manufacture of electronics is changing the eco¬ 
nomic characteristics of the electronics industry. The factor, for 
example, of printed circuitry, the idea of introducing printed circuits 
instead of having wires attached by solder in the back of a TV set. 
Instead of having this rat’s nest of wiring which is very difficult, if 
not' impossible, to assemble automatically, people have devised the 
concept of printed circuits, taking the pattern of circuitry and etching 
it on plates of vinylite, with conductive material acting in place of 
wires. This lends itself to automatic manufacture. It makes it 
possible to reduce such bottlenecks as those that have arisen during 
the Korean hostilities, for example, when mobilization requirements 
made it impossible to get the trained people to assemble electronic 
equipment. 

This factor made it imperative that a heavy reliance was put on 
printed circuitry. This is being introduced into the TV manufactur¬ 
ing. You will see it in some TV sets. This general change is typical 
of what is happening in the electronics industry. Great increases in 
output are bemg made possible by reliance upon mechanization, upon 
very heavy increases in investment. Formerly you required only sol¬ 
dering irons and few parts. Now you begin to need substantial 
amounts of capital equipment. The changes that occur in the manu¬ 
facture of components, also demand a heavy investment in capital 
equipment: this is changing the economics of the electronics industry. 
If you have an expansion of the electronics industry due to automa¬ 
tion—which you are having—you do increase capital investment, as 
well as the general number of firms in the field. 

A survey we did about a year ago indicated there were approxi¬ 
mately a thousand companies in the country at the present time man¬ 
ufacturing control equipment. For some of these it represents their 
total output; for others it is only a small part; for example, GE, 
Westinghouse—control equipment is a small part of their total output. 
There are a thousand companies and a 3 to 3 y 2 billion dollars a year 
output of this type of equipment. This is increasing at a very rapid 
pace. 

The basic point I want to make is that I don’t think you can use 
both arguments validly. I think one or the other is true. You either 
are going to have an increase in secondary investment, because you 
are increasing mechanization in electronics—you either concede that, 
and stick to your guns on the argument that you are not going to have 
as rapid an employment increase in the manufacture of such equip¬ 
ment—or you concede the fact that you are going to have an employ¬ 
ment increase and not going to take a large capital investment. 

The Chaibman. Would you like to comment on his statement ? 

Mr. Buckingham. It is possible to have an increase in investment 
and decline in employment at the same time. This is one of the major 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


problems because as we move into an area in which we must rely, 
not on a level, maintaining a continuous level of investment, but an 
increased level of investment, or rather an expansion of investment, 
then I think our stability becomes more precarious because we are 
relying for total spending on spending of businessmen, on capital ex- 

S enditures, which can be stopped at any time. This is in contrast to 
le food and clothing purchases of individuals who will continue to 
purchase these things pretty much whether they have the income or 
not. 

The Chairman. On the question of expenditures, aren’t these ma 
chines leased generally rather than purchased outright) 

Mr. Buckingham. I couldn’t say. 

Mr. Diebold. I think it varies both ways, sir. In the office-equip¬ 
ment field you are predominantly concerned with the use of computers, 
leased equipment. 

The Chairman. Do you mean almost exclusively? 

Mr. Diebold. No: I wouldn’t say that. All manufacturers other 
than IBM in the office field will both sell and lease. IBM will only 
lease. 

The Chairman. IBM will only lease? 

Mr. Diebold. Yes, sir. That is, the computers. They will sell some 
of their other equipment. All other manufacturing firms offer both 
opportunities, to buy it or to lease it, and in many cases, to lease with 
an option to buy. 

The C hairma n. I believe you gentlemen agree that, in order for 
our country to expand and progress, and stay on even keel of pros¬ 
perity, we must have full employment and mass purchasing power. 

I thought I gathered from both your statements that these two 
things are very important, full employment and mass purchasing 
power. 

Mr. Diebold. That is right. 

The Chairman. If the purchasing power should turn downward, 
we would be in real trouble. 

I notice your statement, Professor Buckingham, about education. 
I wanted you to elaborate on that a little bit more, if you will. You 
state— 

The United States will graduate 27,000 engineers and 50,000 technicians in 
1956, compared to 45,000 engineers and 1,600,000 technicians of comparable 
quality who will be graduated in the Soviet Union. 

Isn’t that rather an alarming statement? 

Mr. Buckingham. I think so. These figures came from a study 
from one of the national engineering societies, and their conclusion 
was that this was very alarming. Since there are long-run benefits to 
be gained from automation, and since automation is;sometking that we 
certainly ought to encourage, there is a possibility that this shortage 
of highly trained specialists will become a bottleneck, which , wul 
limit the automation in the future. We are finding at Georgia Tech, 
for example, very great difficulty in finding the people with the neces¬ 
sary mathematical background, physics background, and even other 
trained technicians, to operate these machines. 

The Chairman. So you think that is a real bottleneck right now, 
lack of education? 

Mr. Buckingham. I think this could very well become a bottleneck 
very quickly. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 41 

The Chairman. Well, how will we meet this problem? What is 
your suggested remedy? How shall we proceed to get around that 
bottleneck? 

Mr. Buckingham. Well, I think that since the immediate benefits 
of automation come to the business firm which is able to employ 
automation, that following my suggestion that both business ana the 
Government should be prepared to accept responsibility for the con¬ 
sequences, I think business firms will find it in their own economic 
self-interest to increase the endowments of colleges^ and universities, 
to make. possible more scholarships, so that deserving, qualified, but 
impoverished students can go to college. These are students who 
otherwise would not be able to do so. 

I think lkrge corporations also may veiry well find it in their interest 
to set up training programs .to train some of the workers who are dis¬ 
placed from jobs because of automation for the more highly special¬ 
ized jobs which automation requires. 

Of course, we must remember that all workers cannot be retrained. 
Many workers in their forties, fifties, and sixties who have worked at 
a single job for 20 or 30 years, cannot be sent back to college or through 
Some training program and taught how to operate some computing 
machine. 

These machines and automation in general require a high degree of 
stamina. The nervous tension is very high, and everyone is not well 
suited to this kind of work. 

Mr. Moore. I understood you to say, Mr. Diebold, that had 
we not had automatic processes, we might not have polyethylene in 
the quantities we had now. 

Mr. Diebold. Yes, sir. I used that as an example—I think it has 
been brought out by a number of people in the process industries that 
you could not otherwise produce certain products. 

Mr. Moobe. Could you cite a few of the household implications of 
that? What would be missing from our day-to-day world today 
without polyethylene? 

Mr. Diebold. An increasing reliance, I think, is being put on poly¬ 
ethylene for use in everyday household items. This is, as I cited the 
case of it being used as containers for the drug industry, very rapidly 
increasing. A. large amount of production output is being used in 
jhe chemical industry for containers and for bottling purposes, is be¬ 
ing used for plastic meeting, for industrial-tube manufacturing, even 
in the electronics industry itself as sheathing for wires and cables. 

Mr. Moore. It is essentially a whole new industry ? 

Mr. Die bold. Yes, sir. I think atomic energy is another. You 
could not have an atomic-energy program without first fully auto¬ 
mating the manufacture of radioactive materials. 

Mr. 1 looms. Professor Buckingham referred to a dissertation at the 
University of Chicago, which indicated a striking reduction in em¬ 
ployment requirements in the 12 industries studied 

Is there a similar dissertation available which studies the cases of 
industries that have gone ahead and of whole new industries that 
have increased employment? 

Mr. Buckingham. I am not familiar with .any, but I think that 
we would find that there has been, of course, an increase in employ¬ 
ment in many other sectors of the economy. 


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Mr. Moore. In any case we have a pretty high level of employment 
today. 

Mr. Buckingham. Yes. What is happening is a shift from direct 
production workers to indirect. This has been going on for a long 
time. At the present time many products are sold in which far more 
labor went into the selling, and the financing, and the advertising, and 
the packaging, and the design of the package, and so forth, than went 
into the actual direct production of the goods themselves, the physical 
production. 

I think this trend is going to be accelerated. Automation puts 
more pressure here, which means we are likely to have an increased 
expansion in the various service trades. 

Mr. Diebold. I would like to comment, if I may, Mr. Chairman. 

The Chairman. You may comment on that, Mr. Diebold. 

Mr. Diebold. I think that one of the basic factors of our economy 
is we are a dynamic economy; we have a high level of mobility ana 
shift and constant change. 

At the turn of the century the proportion of the labor force engaged 
in agriculture was very substantially higher than it is at the present 
time. The proportion of the labor force engaged in manufacturing 
has been decreasing during the past 20 years. We have had a shin 
into service industries. We are having comparable shifts within each 
of these industries. We have continual change in dynamic movement, 
from one industry to another. 

It seems to me that the fact of automation is one which does not 
fundamentally change this. It may accelerate some of the change. 
It will bring about certain of the shifts. But it seems also me one of 
the points that we must look for in determining and assessing the eco¬ 
nomic effects, both short and long term, on labor and the economy, is 
to determine precisely what are the nature of the shifts? Where are 
we getting increases ? How can we train people for these changes in 
requirements? 

I think Professor Buckingham brought out some very good points. 
He emphasized the fact thatbusinesses are forced by automation to be 
very concerned with assuring a continuous flow, a continuous output 
of their product. 

This means their business has a very high stake in increased pur¬ 
chasing power and insuring that purchasing power. I think it would 
be very foolish and shortsighted to assume that businesses are not 
very concerned about this point, and are not well aware of the fact 
that they must maintain purchasing power. 

I think Professor Buckingham also brought out a very important 

E oint in saying he felt that changes in automation will take time to 
e brought about; that it will be slow; that it is being held up by lack 
of trained manpower. And I certainly agree with everything he had 
to say about education, and the great importance of paying increased 
attention to the educational requirements of the country. 

This I think is the key factor in determining the speed of automa¬ 
tion : the availability ot people to bring about these changes. And 
the speed of automation is in itself I think the key to the economic 
impact of automation. 

It was, I think, the famous economist, Lord Keynes, who said, “In 
the long run we are all dead.” 


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I think we are all concerned with the short-run changes of automa¬ 
tion and what these will mean, businessmen no less than workers and 
members of the Government. The shifts that have taken place in the 
past, I think, were difficulties of the changing economy. 

As for the figures in Dave Osborne’s study at the University of Chi¬ 
cago, I would not consider them at all typical, or ones that could be 
applied “across the board.” This was a very limited study. 

I was directly connected with Mr. Osborne. He came to me for 
assistance in preparing his paper at the time, and I know that this 
was based on a small number of cases. It seems to me, concerning 
this figure of 63.4 percent average reduction in employment, that it 
would be very bad to give the impression that this is a general average 
expectation, as Mr. Moore has pointed out. 

We have a very high level of employment at the present time, and 
we also have acceleration of automation. 

Mr. Buckingham. I would like to comment, if I may. 

One important social implication which has not been brought out 
is one I would like to underscore. It is a point made by Mr. Diebold 
in a paper he wrote recently. 

It is that we may be faced in the future with the possibility of trying 
to find some way of making our society and our culture meet the needs 
of people who do not have to work their entire lives, in order to find a 
rewarding experience. 

We will have to concentrate on what to do with leisure time. I 
think that a shorter workweek eventually will come. We have been 
seeing this going on in the past, and this raises a lot of social problems. 

The entertainment industry is bound, I think, to expand as a result 
of this. We need to give considerable attention from the social point 
of view as to what kind of entertainment we are going to have. This 
is an industry that is going to absorb many of the workers who are 
displaced from direct production jobs, and the direction which this 
sort of thing could turn could be very important to us all. 

The Chairman. Will you make a prediction as to what will happen 
to the workweek? 

Mr. Buckingham. I think that certainly in industries that are 
likely to have automation applied to them there is going to be a pres¬ 
sure to reduce the workweek. 

The Chairman. Do you have any figure in mind as to the hours per 
week in the future ? 

Mr. Buckingham. Some industries already, I think the rubber- 
workers, are on a 30-hour week. Of course by reduction of the work¬ 
week, this does not mean the reduction of the take-home pay. When 
the workers want a reduction of the workweek, they want less work 
for the same pay. I think there is an economic argument behind this; 
that is, again, ir we are going to reduce the workweek, if we reduce the 
total take-home pay, that this will cause a fall in consumption, so 
this does not mean reducing the total take-home pay. It means maybe 
reducing the workweek from 40 to 36 hours, for the same total pay 
that is being paid for 40 hours now. 

The Chairman. Do you have any comment to make on that, Mr. 
Diebold? 

Mr. Diebold. I think I would certainly agree with Professor 
Buckingham’s comments that it does not mean a decrease in pur- 

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chasing power. If you are increasing the total output of goods of 
the economy, you may take part of that as material standard of 
living—as physical goods—and part as leisure. You can produce 
many more goods, and you either work the same number of hours 
and produce a great many more goods, or you cut down somewhat 
on the hours. 

I don’t know though whether we will ever be faced with cries for 
a 5-day weekend or not. 

The Chairman. Would you venture a prediction on the workweek, 
say, when we have 200 million people in this country ? 

Mr. Diebold. Well, too many people have gone down in forecasts. 
I think it is clear we are going to go down into the low thirties in 
terms of hours per week. It seems to me this is realistic. 

The Chairman. What is your idea about that, Professor? 

Mr. Buckingham. I would like to agree and add one other point. 

Some studies were made, particularly in England during the war. 
and also in this country, that indicate that productivity in terms oi 
output per man-hour can be affected by the number of hours worked 
per day, number of days worked per week, and so forth. 

These British studies, for example, indicated that if workers 
worked 10 hours per day for 4 days and had a 3-day weekend, put in 
their 40 hours per week in 3 days, they would produce considerably 
more than they would if they spread the 40 hours over 6 days. 

I think this explodes the old idea that if you have a 3-day weekend, 
workers will spend 2 days anticipating the weekend and 2 days re¬ 
covering from it and you won’t have any work at all. 

Mr. Moore. I have a question based on that point, Mr. Chairman. 

Not all industries are susceptible to the advantages of automation. 
By what process and how long will it take for this short workweek 
to spread out into these less favored industries ? 

Mr. Buckingham. Perhaps it won’t spread at all. Farmers work 
about as long as they ever did, I think. They are producing more 
because of the machinery ? but I don’t think there has been a con¬ 
siderable amount of reduction of the hours they put in. 

Mr. Moore. The other question I had is in connection with the 
problem of small and large business. I wonder, Mr. Diebold, if you 
could elaborate on a hint that you threw out; namely, that you 
foresee the early possibility of the introduction of tape-directed ma¬ 
chines capable of handling small lots. Is that in the foreseeable 
future? 

Mr. Diebold. It certainly is in sight. I think that I made the 
point, or tried to make the point, that it is going to take some time 
before these are used widely, but perhaps I should explain a little 
about this idea. Traditionally we control machine tools by means of 
mechanical devices—cams and levers—and it is possible to achieve 
automatic production by building in a series of mechanical controls. 

If you have a very long run of a product, if you know that you 
are going to make a product like this ashtray for a run of a million 
units, it will justify your efforts to tool up for it, to set up a process 
which will reduce the amount of time. You will have to set it up 
carefully and grind cams for it, but you will have an automatic 
operation. 

There is a new concept introduced as part of automation into the 
way of controlling machines. Instead of storing information about 


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a product in the form of cams or in the form of patterns to be followed, 
you can store the information on a magnetic tape or paper or vinylite 
tape and it is possible to build a machine (and a number have been 
built) controlled by such a tape. My firm has done a good deal of 
work in this particular area, and there are about 30 projects, I would 
say, at the present time in this country in which machines are being 
controlled by means of tape. 

It is possible to put the instructions onto the tape, to play the tape 
into the machine control, and, through the use of servomechanisms 
and various types of other automation equipment, it is possible to 
control the movement of the tool and the actual movement of the 
machine. 

If you have a run of 25 units, and this is typical of American pro¬ 
duction—the bulk of our national production is in groups of less than 
25 similar items at any one time—you have these snort runs and tra¬ 
ditionally it hasn’t been worthwhile to put in automatic machinery 
because you have to change it frequently and your investment would 
be enormous to do this. If you can use machines of this type, you 
can store the tapes. You can put it on a shelf. 

If you make 10 of these units now and 10 later in the year you 
can store the tape. This has a number of implications. It has sig¬ 
nificance in such areas, for example, as aircraft manufacturing, if 
we were to try to put planes out at the same rate that we were forced 
to put them out during the Second World War, at the rate of one 
an hour in some of our large bomber plants. The changes in the 
technology of the planes themselves, the increases in the speeds, have 
meant a decrease, for example, in the thickness of the wing. It has 
become necessary now, instead of fabricating the wing, instead of 
putting it together by sheets of metal, to carve it out of solid blocks 
of metal. To do this by hand-controlled machines is an almost im¬ 
possible task. It means that hundreds of hours of machining time 
have to be put into each part. In terms of the connecting unit between 
the wing and the fuselage of one of our planes—I think there are 
about 120 hours of machine time on that particular part, for each 
side of the plane—it would mean if you wanted to turn them out 
1 an hour, you would have to have 240 machines of this type to do it. 

This would be of that particular type of machine tool, about an 
8-years’ output of the industry. The military catastrophe that would 
result from reliance on such techniques is, I think, very plain. By 
means of tape controls it is possible to store this information in a tape, 
to use a machine that can operate much more rapidly, or cut metal 
at a higher rate than can a traditional machine tool and to quickly 
adapt a large enough group of general purpose machines into highly 
automatic special-purpose tools for quickly producing the necessary 
output. 

It means you can vary the characteristics of the plane. You can 
change it from plane to plane, and the engineering changes in the air¬ 
craft industry are enormous. There are a great number of industries 
where ability to change is important. 

I would like to comment on this point of Professor Buckingham’s 
about standardization. I think, ox course, we are having increased 
standardization. We are trying to get it in our parts, components, 
and we are relying upon the way in which these are assembled 


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to provide some of the changes. However, the introduction of flexi¬ 
ble machine tools is making possible the production of products 
of quite different types and characteristics. It isn’t going to be all 
standardization. 

We aren’t all going to end up eating out of the same type of china, 
eating the same food, and driving exactly the same kind of automo¬ 
biles. Perhaps automobiles are closer to this than other items in the 
economy. Consumers’ preference is such that a manufacturer can’t 
get away with standardization, completely. He is too suspectible to 
people coming in with other changes. 

I think that although standardization is terribly important in bring¬ 
ing about automation, it would be giving the wrong impression to 
imply that everything is going to be the same. 

The Chairman. Mr. Ensley, would you like to ask any questions? 

Mr. Ensley. Mr. Diebold, you indicated the need for factual study 
of automation. Could you elaborate on the type of information ana 
statistics needed for intelligent public and private policymaking? 

Mr. Diebold. I would like very much to, sir. I think there has 
been so much general talk about automation that really it is very hard 
to get down to the facts to determine precisely what is happening. 
This, as I said in the beginning, is one of the reasons that I think we 
all welcome these hearings, to begin to lay the basis for some facts. 

It seems to me the way you have organized the hearings is extremely 
good. It is very good, the idea of case studies for specific industries. 
I think if this could be extended into long-term case studies, actually 
sending teams into industries, making case studies of specific occur¬ 
rences and specific companies and then in terms of the structure of 
that particular industry, arriving at a projection of what realistically 
is going to happen in that industry in terms of technological change 
and the rate of that change, that you then can begin to make mean¬ 
ingful statements about the aggregate of the economy. 

I think it is only by going back to the individual industries and in¬ 
dividual plants within those industries that you can begin to get any 
real collection of facts about what will happen. You can’t generalize 
about the economy. In certain specific industries, you will have very 
rapid change, in others very slow. Who should do such studies, I 
think, is an open question. 

These studies can be divided into a number of components. Sta¬ 
tistical agencies of the Government, I think, can play a very important 
role in this. It could be very useful, I think, if the BLS broke down 
and produced a series on the field of automation, in terms of the manu¬ 
facture, and the output of equipment. 

It is virtually impossible, or at least, a very big task. We tried a 
year ago to draw an index of what is really happening in the intro¬ 
duction of automatic equipment and automation equipment. It is diffi¬ 
cult to bring this out. I think some of the individual areas could be 
brought out by BLS. That would be highly desirable. I think the 
area of skill requirements is something the Labor Department should 
be very much concerned with, specifically what changes in skill are 
required. 

The productivity group, the people putting together the produc¬ 
tivity series at BLS, are constantly concerned with change. There 
has been a high level of good case studies made by this group in the 
past. 


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I think, too, it is the role of some of the private foundations. It 
seems to me this is an area that the Ford Foundation, for example, 
ought to be highly concerned with, because this is in its truest sense a 
field in which the changes are going to affect our entire society. That 
is the very reason for the existence of some of the groups such as the 
Ford and Carnegie Foundations. It seems to me perhaps some parts 
of these studies ought to be conducted by a group such as that. 

The National Planning Association has been very active generally 
in this field. That is another group that is concerned with these 
changes. I am a member of the automation committee of the National 
Planning Association and we have expressed great concern about the 
study of these facts. 

Mr. Buckingham. I wonder if I might underline this statement: I 
think what Mr. Diebold says is very important. I would like to go a 
step further if it is not already explicit in his thinking. Mr. Moore’s 
questions and the statements made already imply there are far-reach¬ 
ing consequences of automation, but we are thinking of it in a frame¬ 
work that is somewhat obsolete. We are thinking in terms of market 
control of one type. This is control of particular industries. 

We are thinking in terms of concepts which are somewhat out of 
date. It has been 16 years since the Temporary National Economic 
Committee made its monumental study, and since that time we have 
had World War II and 10 years of unprecedented prosperity which 
have changed many basic assumptions which need to be going on at 
the present time. 

There is a great need of another study of the comprehensive scope 
of the former committee to investigate the business community m 
general, the economic system, and try to fit automation into it so we 
will not be using an obsolete framework of obsolete techniques. Since 
World War II, for example, large firms have grown much larger, 
but many of the predictions of the 1930’s have not come true. Many 
of the predictions of increasing monopoly—we seem to have a lot of 
competition in areas where many of our theories would indicate we 
ought to have airtight monopolies. 

We see practices coming to the fore which are not specifically 
touched by the antitrust laws which may have a great effect on lessen¬ 
ing competition. Of course, the antitrust laws are based on earlier 
concepts. I think a temporary national economic committee with a 
view toward modifying our whole legal structure along this line would 
be something that would be most useful. 

Mr. Ensley. I gather the two of you believe, first, there should be a 
regular gathering of data and analysis of these data by, say, the De¬ 
partments of Labor, Commerce, existing agencies, and private groups, 
and, second, Professor Buckingham has some more monumental spe¬ 
cial study of our whole economic organization in mind ? 

Mr. Buckingham. I think a study of this type, a large congres¬ 
sional study, would serve to influence the private groups that Mr. Die¬ 
bold is talking about, to orient their thinking, to get them interested 
in things, because this would concentrate attention in a central place, 
about a very important thing, and corporations and labor unions, and 
private research organizations, and State governments, and so forth, 
would become aware of these problems. 

I think a lot of the research would be taken up from there by these 
other organizations. 


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Mr. Diebold. I think these hearings, themselves, will play a large 
factor in that the hearings may very well stimulate some ox the private 
groups undertaking research. I think the only modification I would, 
like to make in your statement is that I do feel that the continuous 
gathering of data about automation is part of the general economic 
activity of the country and is certainly part of the data that should 
be gathered by Government organizations, such as BLS, that specifi¬ 
cally have the mission of publishing information about the economic 
changes. 

I think it would be unfortunate to tack too much on automation. 
I think there is a slight tendency to take this new term, and all of the 
marvelous machinery that goes with it, and to use it as a sort of 
umbrella for things that may very well be necessary, in any case. 

I don’t mean to say that another TNEC would not be a wholesome 
thing, but I don’t think you want to present this from the standpoint 
of it being specifically automation. There are a great many other 
factors that are involved in this, and to tack it exclusively on to auto¬ 
mation would, I think, simply be another factor lending to confusion. 

Mr. Buckingham. I didn’t intend to mean that would be the sub¬ 
ject. I meant a general study of the scope of the TNEC, of which 
automation would be but one part 

Mr. Ensue y. Whenever the committee takes up a subject such as 
this it is always looking for the economic-policy implications. .A 
couple of points that you raised interest me. I gather substantial 
capital funds are needed to automate, and I gather Doth of you agree 
that we need constantly increasing mass purchasing power. 

From your experience with business, Mr. Diebold, and from the 
standpoint of furthering automation, would you give priority to in¬ 
vestment funds or consumer purchasing power if we have tax 
reduction? 

Mr. Diebold. I think there certainly is a considerable reappraisal 
constantly needed on the question of obsolescence, the rate of it and 
the extent to which you can depreciate, as far as equipment goes. 
Some of the depreciation statutes, I believe, are not entirety in keeping 
with the real terms of the requirements in a business. Obsolescence, 
of course, is far more important to a firm than the actual wearing 
out of the equipment and the rate of obsolescence has been increased 
substantially by automation. I think this has a direct bearing on 
taxation, as it applies to the allowance for depreciation. It seems 
to me that you want to be sure that you maintain your purchasing 
power, and you want to be sure that where it is possible you are enact¬ 
ing tax laws—and I think everyone is well aware of this; I don’t 
think it is anything new—that you enact tax laws which insure that 
you maintain the large mass of purchasing powerj and this is pri¬ 
marily from lower-income groups. This is, I think, a basic fact 
which everyone is well acquainted with. 

The Chairman. Professor Buckingham. 

Mr. Buckingham. I think there is a conflict inherent between hav¬ 
ing more consumption and having more investment. The question 
is whether we want higher living standards now, or whether we want 
higher living standards later. Now, this is a decision which is a po¬ 
litical decision rather than a decision of economists. This ought to 
be made by people in elections, to decide which they want. The kind 


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of studies which we were discussing, particularly Mr. Diebold’s dis¬ 
cussion of continuing to gather data in the various public agencies, 
would give the public the information which they need to Know so 
they could decide whether they wanted higher living standards later 
or now. As a general rule, I think we certainly have to have a dis¬ 
tribution of income which is sufficiently equalitarian that we maintain 
high level of employment. Once we have that and a high level of 
purchasing power, then I think the emphasis ought to be on more 
investment tor the future. 

As soon as we run into declining purchasing power, the emphasis 
might very well change toward increasing mass purchasing power, 
but it is a political decision rather than a decision that can be made 
by economists or engineers. 

Mr. Diebold. I think we come up against this basic conflict, as I 
pointed out before, this question of investment in a period of decreased 
employment. If you hit a slump, it seems to me that is the time when 
you want the investment. That is when you want to go into road¬ 
building programs, capital-equipment programs, because this will 
create a large number of jobs. I don’t think it is something you want 
to relegate specifically to the boom time. It seems to me that funda¬ 
mentally this comes back to the decision of the consumer. 

I think Professor Buckingham is quite right in saying this is the 
decision of the people at large, not only in terms of elections. It is 
the day-to-day decision of the consumer: Do you want more goods 
now or investment and have them later ? The investment programs 
certainly are a key factor in helping economic conditions of the coun¬ 
try in a depressed period. I don’t think it should be relegated to 
periods of boom at all. It just accentuates the problem of boom. 

Mr. Buckingham:. In periods of depression we need to accentuate 
both investment and consumption. 

Mr. Diebold. Certainly. 

Mr. Ensley. You wouldn’t make a judgment today, 1955, as to 
which would further automation fastest, tax adjustments which would 
stimulate investment, or tax adjustment, which would further stimu¬ 
late mass purchasing power? 

Mr. Diebold. Both factors are important in making a decision in 
a plant. That is what it comes to, specifically; when you make a 
decision on the investment in a specific line of equipment. You are 
faced with both factors. I would say the key question that we face 
in such an analysis: What level of demand can you assume is going 
to be maintained? 

If .you can assume—you are certainly not likely—if you suspect you 
are going to have a big drop in demand, you are certainly not likely 
to make extensive investment 4n resources, no matter what the tax 
statutes are. This is a little bit like use of monetary restriction and 
encouraging factors in trying to get a revival in a slump. If you 
simply lower the interest rate, this jn itself is not a big inducement to 
invest, unless you are sure you will have some purchasing power to buy 
it. In the boom period, the change in draining in a small portion of 
your tax laws are more severe. If you increase your interest rate 
this certainly affects the amount you are going to invest. The key 
reason you will invest is because you have consumers who will buy. 
I would sav that is the key factor. 


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Mr. Buckingham. I think there is one way of answering your 
question by putting it this way: 

The level of investment or the amount of investment is much more 
volatile and dynamic. It has a much more immediate effect than 
changing the level of consumption has on total employment. 

If we get into a severe crisis, a sharp downturn or upturn, then I 
think tax measures may well be necessary to stimulate or to affect 
investment, either to push it up or hold it down. However, about 
80 or 85 percent of our total spending is consumption spending. The 
long-run basic problem is to maintain a high level of consumption 
so consumption cannot be affected as easily by changes in taxes as can 
investment. 

I think although our long-run emphasis ought to be on maintaining 
a high level of consumption, that it is the investment factor which is 
the dynamic one. Our economy balances, so to speak, on a razor’s 
edge. If it starts to fall one way, it is investment that can hold it 
up, not consumption. 

But in the long run we need a high level of consumption. 

I would like to comment on one other thing Mr. Diebold said. 

It is true that actually these decisions have to be made by the whole 
people of the country. They cannot be made by experts, because 
these are really political decisions. There is a difference, however, 
between the political decisions of people in their elections and the 
economic decisions of people in their consumer purchases. There 
is an equal distribution of political influence as far as voting is con¬ 
cerned. Every person gets one vote. But in the market place it is 
the dollars that vote rather than people, and this is one thing which 
Government policy can very well affect. A person with a lot of 
money has many more votes m the market place than a person with a 
little money. 

The Chairman. Would you like to comment ? 

Mr. Diebold. Yes, sir. 

I think his very last sentence emphasized again the first aspect, 
that it is purchasing power, I think, whic h is t he key to the problem. 
Doesn’t this basically come down between WFA and PWA, the phi¬ 
losophies of the two projects? You either try to stimulate economy 
by increasing investment or by increasing the purchasing power of 
citizens generally. I think it has certainly been borne out that the 
latter course is one which produces a more immediate and wider- 
spread revival. I feel that it is a qestion of what people have in their 
pockets to spend that is the key. 

The Chairman. I would like to ask you, Mr. Diebold: You are 
familiar of course with the Employment Act of 1946. Are you in 
accord with the objectives of that act? 

Mr. Diebold. I certainly am. 

The Chairman. Are you? 

Mr. Buckingham. Very definitely. ' 

The Chairman. Do you think it has been worth something in the 
last 10 years? ' 

Mr. Buckingham. I think it has not only been worth something, 
I think it has been a necessity. 

Hie Chairman. Do you agree ? 

Mr. Diebold. I believe it has been worth a good deal. 


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The Chairman. Any other questions? 

(No response.) 

The Chairman. Thank you, gentlemen, very much. 

At 2 o’clock we will hear Mr. D. J. Davis, vice president, manufac¬ 
turing, Ford Motor Co. 

The subcommittee will stand in reeess until 2 o’clock here in this 
same room. 

(Whereupon, at 11:55 a. m., the committee recessed until 2 p. m., 
same day.) 

AFTERNOON SESSION 

Hie Chairman. The subcommittee will come to order. 

When we asked Mr. Heniy Ford II, president of the Ford Motor 
Co., to discuss with us the impact of automation on long-run levels 
of employment, he replied that you, Mr. Davis as the company vice 
president, manufacturing, could represent him, as one much better 
qualified to discuss this particular subject matter. I am sure that 
we must trust Mr. Ford’s judgment in this matter and we are happy 
to have you with us this afternoon. 

Your company has had a great background in this field. Many 
persons must have had some part in it and perhaps many more claim 
some part in it. Nevertheless, the impression I get from the wealth 
of materials available on automation is that Mr. D. S. Harder, now 
executive vice president of the Ford Motor Co., was perhaps the 
originator and early user of this word “automation” which, as people 
are fond to point out, does not appear in recent dictionaries although 
we can scarcely pick up a magazine without finding a reference to it. 

While we are talking about the word, I think it would be well to 
remember, as Senator O’Mahoney recently reminded us, that— 

new problems are not created by new words. The problems appear first and the 
words afterward, but occasionally new words are invented to make old problems 
seem new. 

While the word may be new, machine tools with more or less auto¬ 
matic devices, the assembly line, etc., have been with us for a long 
time. We are happy to have you, Mr. Davis. We look forward to 
hearing your testimony. 

STATEMENT OF D. J. DAVIS, VICE PRESIDENT—MANUFACTURING, 

FORD MOTOR CO. 

Mr. Davis. Thank you. I would like to read my statement first, 
if I may. 

The Chairman. That will be perfectly all right. Proceed as you 
desire. 

Mr. Davis. Ford Motor Co. welcomes the opportunity to appear 
before this subcommittee. I have been asked to speak for the company 
and to present our views on automation in the automotive manufac¬ 
turing field and its possible effects on our economy. 

We at Ford feel that a necessary prelude to any discussion of auto¬ 
mation in the automotive industry is a brief review of the history 
of technological developments within Ford Motor Co. itself. As you 
may know, many regard the founder of our company as the father 
of mass production techniques in the manufacture of automobiles. 


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Without these techniques, there would never have been an automotive 
industry as we know it today. 

Shortly before World War I, Mr. Ford set up an assembly line to 
produce flywheel magnetos. So far as we know, this was the first 
installation of progressive assembly on a moving conveyor in the 
industry. It reduced assembly time of the magnetos from 20 minutes 
to 5 minutes. This progressive assembly line principle then was 
applied to many other small parts, and the result was that assembly 
time of those parts was cut in half. These successes led to the big 
test of the new method. Assembly of automobile chassis in a street 
alongside the factory at Highland Park, Mich., was tried by pulling 
the chassis along a 250-foot route past stockpiles of parts spaced at 
regular intervals. This experiment reduced chassis assembly time 
from 14 hours to 6 hours. It was then decided to mount the wheels 
on the chassis and roll them down a channel track from one station 
to the next. 

Introduction of a moving chain conveyor then eliminated the need 
for pushing the chassis. These successes resulted in the installation 
of conveyors throughout the Ford manufacturing plants to deliver 
parts to the main assembly line. This advanced assembly technique 
was a very important factor in enabling the company to produce the 
model T car in the large volumes and at the low prices which only a 
few years before would have been thought impossible. 

Conveyors at Ford not only increased productivity by freeing 
operators from manual handling work, but also decreased overhead 
costs by reducing aisle and floor storage space. The net result of con¬ 
veyorizing at Ford was a reduction, over a 5-year period, of 50 per¬ 
cent in the production costs of the model T. The reflection of that 
reduction in the selling price of the car greatly stimulated demand and 
opened the auto age. 

Even in the very early days of the model T, the automotive indus¬ 
try had come a considerable way from the time when the first cars 
were built in back-alley shops and when no one took them very se¬ 
riously. Those that were built in these little shops were so fabulously 
expensive that very few people could afford to buy them. Although 
there were only four cars registered in the city in 1895, Chicago 
banned them from the streets. Nevertheless, the idea of automotive 
transportation took hold and, in 1899, output reached 4,000. When, in 
1904, production went up to 23,000, the Nation’s leading financial 
experts warned the car makers that they were dangerously over- 
expanded and soon would go bankrupt. 

To us that sounds silly now. As a matter of fact, the bankers prob¬ 
ably were right, or they would have been but for one thing. The 
American automobile manufacturers were to realize the advantages 
of mass production techniques as established at Ford, and as the cost 
and prices of the cars went down, the industry grew and America 
was put on wheels. 

From its humble beginnings, it is now a matter of cold statistics 
that the automobile has been responsible for 90 percent of the em¬ 
ployment in the gasoline industry; 80 percent in the rubber industry; 
70 percent in the plate-glass industry; 60 percent in alloy steel—along 
with substantial percentages in a great many other industries. 


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Manufacture of the model T, of course, was a relatively simple mat¬ 
ter, when compared with the production of our modern car lines 
today. The model T had less than half the number of parts that go 
into our current cars—5,000 as against more than 10,000; they came 
in any color the customer desired, so long as it was black; there were 
only a few basic body styles, and those did not change radically from 
year to year. 

In recent years the rapid rate of change in our products has dic¬ 
tated major changes in our productive processes. Our manufacturing 
facilities now must be sufficiently flexible to permit mass production 
of hundreds of different models, styles, and colors, and these change 
radically from year to year. 

We at Ford have expanded our manufacturing facilities tremen¬ 
dously since the war, and we are continuing to do so. Since 1946 the 
company has invested almost $2 billion in new facilities and plant 
expansion, and we plan to spend many millions more in the near 
future. At the beginning of this expansion program, a new depart¬ 
ment, which we called our automation department, was organized to 
coordinate the planning and inprocess handling activities of the 
stamping operations. This department then branched out and re¬ 
viewed the inprocess handling problems of other areas, such as engines 
and engine components. 

These early programs at Ford, however, were concerned chiefly 
with the rearrangement of standard and existing machines and the 
tying of them together with mechanical devices in order to eliminate 
many of the hazardous and costly manual handling operations. A 
gradual evolution then began, and at present there are many groups 
in the various divisions of the company working on their respective 
automation programs. 

All of Ford’s new plant layouts in recent years have been based 
upon the use of inline or transfer machines and mechanical handling 
devices between them whenever our studies have shown that their use 
is justified. In planning and executing this program we feel that 
we are doing no more than our predecessors aid when they utilized 
new technology to mass produce the model T. We do not believe 
that automation, as we use it, is a revolutionary development in pro¬ 
duction technique; rather it is just another evolutionary phase of our 
advancing proauction technology. 

To emphasize that automation, as we consider it, is not new, con¬ 
sider the well-publicized flour mill that was conceived and built back 
in 1807, almost 150 years ago. In this flour mill the grain was dumped 
into a hopper that led to a scale, where it was weighed and dumped 
again into another hopper that had a screw-type conveyor at the 
bottom. This conveyor carried the grain to a bucket elevator, which 
raised it to the top floor. From the top floor it flowed by gravity to 
another screw conveyor that carried it to hoppers feeding the mill 
stones. As the flour emerged it was fed mechanically to screens, 
then into barrels, and finally carried away by wagon or barge. This 
was true automation, whether the designer of that mill knew it or not. 

At Ford we have defined automation as “the automatic handling of 
parts between progressive production processes.” It is the result of 
nothing more than better planning, improved tooling, and the appli¬ 
cation of more efficient manufacturing methods which take full advan- 


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tag© of the progress made by the machine-tool and equipment indus¬ 
tries. 

As used at Ford, automation covers a wide variety of material¬ 
handling and related devices. In the machining of engine cylinder 
blocks, for example, automation moves the parts Toeing manufactured 
into and out of load and unload stations automatically and, at the 
same time, actuates the machine cycle through electrical interlocking. 
When it can be applied, automation also is used to index the part, posi¬ 
tion it, turn it, or rotate it, depending upon the requirements of the 
succeeding operations. 

In most cases a finished unit of Ford automation equipment for such 
machining operations is made up of a combination ox standard ele¬ 
ments, such as conveyors and simple air, hydraulic, and electric con¬ 
trol mechanisms to generate the desired movement necessary for the 
in-process handling. 

The electrical interlocking to which I have referred is a signal 
system, usually accomplished by means of limit switches and relays 
actuated by the movement or position of the part in the process. The 
actuation of these limit switches indicates to the automation control 
panel that parts are in position to be moved by the mechanism, and 
that all transferring equipment within the machines and equipment 
are in positions that will not interfere with the movement of the part. 

To accomplish this, it is necessary that an electrical interlock be 
established to indicate that the machine or equipment is, as we say, 
“in the clear”; and also, that it will maintain this condition even 
though there may be some delay in the completion of the automation 
cycle. For most machinery and equipment, an interlock is required 
both at the loading and unloading stations. The loading station 
interlock must indicate that the space is open and that the transfer 
bar location will permit the loading of the open station. 

When the open space has been filled by the automation unit, the 
interlock must then indicate that the part is in the proper location and 
that the automatic transfer mechanism is also in the clear. So long as 
the machine tool is operating on its automation cycle, it will then 
permit the next machine cycle to start. 

An automated press line is another typical example of the use of 
automation equipment. 

Sheet-metal blanks are first positioned at the front of a draw press, 
where a man loads them into the press loader. The press loader is a 
mechanical device that loads the blank between the dies and, at the 
same time, actuates the press cycle. When the press has completed its 
cycle and the dies open, a lifting mechanism built into the die raises 
the formed part so that it can be extracted by a horizontal extracting 
device, or iron hand, as it is commonly called. 

The extractor deposits the formed part upon a mechanical device 
which positions it for trimming in the next press, and at the same 
time deposits it on an indexing device that conveys the part into the 
trim die. After trimming, the part is lifted in the die in the same man¬ 
ner as in the draw press and is extracted once again with a horizontal 
extractor, or iron hand. These mechanical handling operations are 
performed at each of as many presses in the line as are dictated by the 
process. Upon completion of the last press operation, the formed 
parts are stacked or conveyed to storage or assembly areas. 


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In our press lines, automation has reduced, but not eliminated, the 
need for press attendants. One outstanding feature of our new press 
lines, however, is that attendants are no longer required to have their 
arms or hands in the hazardous areas of the press operations. Nor 
do they drain their energy through continuous tugging and hauling on 
heavy, awkward sheets of metal with raw or sharp edges. 

The economics of this kind of technological advance are clear. 
Back in 1908, for example, it took a skilled sheet-metal man, working 
with handtools, approximately 8 hours to shape the upper half of a 
fuel tank. Today, in our modern stamping operations, it takes 
approximately 20 seconds. If handtools were still used to make the 
upper half of a fuel tank, the labor cost would be approximately $15. 
Its actual labor cost today is only a few cents. On that same basis, an 
$1,800 car today would cost approximately $15,000. 

In today’s competitive market we use automation or improved 
processes, wherever they are justified, in order to reduce costs or 
improve our product. If we did not use them, we would soon find 
ourselves at a competitive disadvantage. 

Automation, however, cannot be engineered into every job indis¬ 
criminately, since it is not always feasible or profitable. Each appli¬ 
cation of automation must be carefully analyzed before it can be 
justified. If either daily volume of the part is low or long-term use 
of the machine is limited, any possible direct labor savings through 
automation are reduced and may be offset by increased maintenance 
costs and depreciation or obsolescence. For example, we can economi¬ 
cally justify the application of automation to the manufacture of 
engine components for the Ford engine. The same extensive appli¬ 
cation of automation, however, cannot be justified on the tractor and 
Lincoln engine components, due to their lower volume requirements. 

As we now see it, there also is little prospect for extensive applica¬ 
tion of automation in our car-assembly operations, where we assemble 
in 20 different locations and are faced with technical problems and 
early changes in product design. Any automation that is applied 
there must be readily adapted to these changing conditions and alter¬ 
ations at a reasonable cost. 

In planning for automation, we must be sure that new machines 
and equipment will produce acceptable parts without excessive down 
time and maintenance work. In a standard or nonautomated pro¬ 
duction line, operators constantly tend and can adjust each machine. 
If one machine breaks down, a backlog of materials for the machine 
can be built up while the repairs are being made, to be worked on 
later on an accelerated schedule. 

If one machine in an automated line breaks down, however, all 

g roduction on that line is halted until the necessary repairs are made. 

►nee the unit is repaired, recovery of lost production must be accom¬ 
plished on overtime or extra hours. 

Although automated machinery and equipment may appear to be 
technically feasible with respect to a particular part, Ford c ann ot 
install them unless they can be adapted, modified, or realined without 
excessive cost to accommodate the expected changes in the part. Plan- 
this flexibility requires expenditures of considerable time and 
money, and when compared with the savings obtainable from auto¬ 
mation, we may decide to continue using nonautomated equipment, or 
to use a reduced amount of automated equipment on these jobs. 


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If we determine that automated equipment should produce savings 
in operational costs and that its probable life will permit full depre¬ 
ciation, we must still determine whether its original cost is justified. 

Automated machinery and equipment, because of its complexity, 
often cost more (including engineering planning) than nonauto- 
mated machines and, in any event, is a new investment. Therefore, 
increased depreciation charges may nullify savings otherwise obtain¬ 
able and make the risk of installing new automated production line 
too great. 

On the other hand, particularly where new facilities are necessary, 
automated equipment may cost less than old-style machines because 
of savings in materials from combining several operations in one 
machine, and indirectly, where plant expansion is involved, because 
of reductions in floor space, lighting, and heating requirements. 

In some of Ford’s new plants, for example, the use of automated 

S ment required 40 percent less floor space than nonautomated 
inery and equipment producing the same products in the same 
quantity. 

Thus, automation, although technically possible for many processes, 
is feasible for only a portion of them, and requires thorough study 
before it is applied to any process. Where automation can be eco¬ 
nomically applied, however, the benefits may be fivefold: increased 
production, lower accident rate, lower direct labor costs, improved 
quality in the product, and reduced floor-space requirements. 

EFFECTS OF AUTOMATION AT FORD 

We have been asked, from time to time, what effect automation has 
had on our labor force. We believe that instead of adversely affecting 
employment at our company, automation has created better jobs, 
while at the same time making them safer and easier. 

Qur Cleveland engine plant, which has been referred to erroneously 
as an automatic plant by some of the more enthusiastic press and 
trade magazine writers, actually is a far cry from a fully automatic 
plant. What we do have at Cleveland, however, and more recently at 
our Dearborn engine plant, is a marked improvement over our past 
manufacturing methods. Where once we had 2,4, or 6 separate manu¬ 
ally operated machine tools, we now employ a single, multipurpose, 
machine tool. Where in the past we used chain hoists and conveyors, 
requiring considerable manual handling of heavy, rough pieces, such 
parts are now moved automatically from machine to machine and are 
mechanically loaded, positioned, and unloaded from the machines. 

This has resulted in more complete utilization of the machine cycles, 
which tends to offset the increased investment, and has eliminated 
many heavy, dangerous, manual, handling operations. 

Now, let us look at what has happened to employment in our engine 
machining and assembly operations. In 1950, Ford and Mercury 
engines were built and assembled at our casting-machine plant and 
motor plant in the Rouge, and the Lincoln engine was built in our 
Lincoln-Detroitjplant. 

In 1954, the Ford 6 and the Mercury engines were built at our 
Cleveland plant, and the Ford 8 and Lincoln engines were built at 
the Dearborn engine plant. Engine production for these years was 


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practically the same, 1,933,661 units in 1950 and 1,954,049 units in 
1954, an increase of 1 percent. During the year 1950, a monthly aver¬ 
age of 8,253 direct labor employees worked on engine production, 
compared to a monthly average of 6,399 such employees in 1954. 

What happened to tne people apparently displaced by automation? 
Although there were 1,854 less direct labor personnel employed in 
1954 than in 1950, on engine production, these people were absorbed 
in our other operations. 

In addition, in 1954 there were 976 more skilled maintenance per¬ 
sonnel employed on engine manufacture than in 1950. As of Septem¬ 
ber 15, 1955, there were no seniority employees on a laid-off status 
from either of the two plants. 

With respect to the future of automation at Ford, we now can fore¬ 
see only a limited application in our assembly plants, which currently 
employ about 30 percent of our total work force. For instance, in 
our three new assembly plants which started production this year, 
the principal differences in these plants from our older assembly 
plants lies in more adequate floor space, which provides for a smoother 
and more efficient flow of materials, rather than in any distinct changes 
in our assembly methods. 

In addition to the inherent nature of automotive assembly-plant 
operations which militates against automation, technical barriers, plus 
tne competitive demand for continual changes in body structure and 
trim design currently prevent the extensive introduction of automa¬ 
tion in assembly plants. 

We have found that, where applicable, automation has supplanted 
heavy, dangerous, and unpleasant work with easier, more pleasant, 
and more interesting work. 

Moreover, the number of skilled higher-paying jobs has increased 
substantially, in both relative and absolute terms. Finally, and this 
is of prime importance, these jobs became safer for our employees. 

Our records for 1954 show that on the cylinder block machining 
operations, which were most significantly affected by automation, the 
frequency of accidents decreased 60 percent from 1950. 

In addition, automation inevitably brings vast new work oppor¬ 
tunities to those who are willing to work and learn. 

Very frankly, we cannot trace in precise detail the extent to which 
and manner in which automation and other measures to improve 
efficiency have affected our overall employment figures. Employment 
volume is affected by a large number of factors, including, among 
others, product improvements, changes in product mix, and a myriad 
of make-or-buy decisions on components. 

The fact is, however, that Ford Motor Co.’s nondefense employment 
has increased, not decreased. During 1954, total man-hours worked 
were 14 percent greater than in 1950, an increase greater than the 
increase in our unit production. Our nondefense employment con¬ 
tinues to be higher than in 1950. 

We do know that without the improved efficiency and cost perform¬ 
ance to which automation has made an important contribution,, the 
continuing improvements that we have made in the quality and value 
of our products would not have been possible within the limits of a 
competitive price structure. 


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Consequently, we would not then be in the strong competitive posi¬ 
tion which enables us to sell enough Ford products to sustain our cur¬ 
rent expanded employment—and all this despite substantial increases 
during this period in the amount we pay our employees, both directly 
and in fringe benefits for an hour’s labor. 

CONCLUSION 

Looking at automation from the broader viewpoint, all of us recog¬ 
nize that our supremacy as a world power today is due not alone to 
our natural resources; it is due in major part to our technological 
progress. 

This progress, which has been made possible only through a free 
enterprise system spurred by vigorous competition, has produced for 
us a standard of living envied by the entire world. 

Automation is just another normal step in our continuous tech¬ 
nological progress. Certainly, such progress will create changes. 
But progress in itself is change—a change always for the better. 

We can expect with confidence that automation will bring to our 
economy the same blessings that all other increases in productivity 
have brought to us down through the years. In the forward march 
of technological advances, whole new industries have been and are 
being created, which provide new job markets for all industrial 
workers. 

Automation is but one of the children of a vast family of tech¬ 
nological developments now emerging in plastics, electronics, atomic 
energy, and so forth. All of these developments open unlimited fields 
for the diversification of industry and for the introduction of many 
new products that do not now exist, just as television did not exist 
commercially 10 short years ago. 

We at Ford do not share the apprehensions of some that the in¬ 
creased use of automation equipment may throw thousands of people 
out of work or otherwise dislocate our economy. Indeed, without 
automation in the steel, chemical, refining, food processing and ciga¬ 
rette industries, to mention only a few that are much more highly 
automated than we ever hope to be, there simply would not be enough 
production of their products to fill our needs, and certainly not at 
prices we could afford to pay. 

Since, in our opinion, the growth of automation will be an evolu¬ 
tionary and not a revolutionary process, it should cause no more than 
a gradual shift of employment, a shift comparable to that from back¬ 
ward industries into new and growing industries. 

This type of shift has characterized our dynamic economy for many 
years, and is one to which the American people are long accustomed. 

The most significant feature of any shift in employment that may 
result from automation is that much of the shift will be from menial 
labor to higher skilled, better paid, safer, and more interesting jobs. 

We believe that automation can and will become an important addi¬ 
tion to the strength of our Nation and to the free world. The growth 
of our influence in the world has always been directly related to our 
advances in industrial productivity. We now have only 6 percent 
of the world’s population, yet we turn one-third of the world’s 
total production of goods and services, and almost one-half of its dur¬ 
able goods. This is because our national genius has found its clearest 


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expression in industrial and scientific technology. We owe it to 
ourselves and to our country to take full advantage of the skills we 
possess and to apply any and all technological advances as they become 
available to us. 

The Chairman. Thank you, Mr. Davis, for a very interesting state¬ 
ment. I personally appreciate it very much. I know the other 
members of the committee will be glad to read it. I wonder if you 
would like to identify for the record the gentlemen you have with you. 

Mr. Davis. Yes. I have Mr. L. T. Williams, of the general coun¬ 
sel’s office, Clerance C. Donovan, of industrial relations, and R. B. 
Darragh, general counsel’s office. 

The Chairman. Now, in order to continue to produce as many 
automobiles, trucks, and tractors^ and everything that you produce, 
as you have in the past, it is gomg to depend on the power or the 
ability of the people to consume and buy them. 

Mr. Davis. Yes, sir. 

The Chairman. What do you estimate the automobile production 
for the year 1955 will be, Mr. Davis, in passenger cars ? 

Mr. Davis. We think it will total 8 million. 

The Chairman. What do you estimate will be the production for 
1956? 

Mr. Davis. We think it will be generally about the same, sir. 

The Chairman. About the same. 

What about 1957 ? 

Mr. Davis. We think perhaps a little more. We think perhaps 
almost 9 million vehicles. 

The Chairman. About 9 million vehicles then ? 

Mr. Davis. Yes, sir. 

The Chairman. In order to sell those vehicles, Mr. Davis, will it 
be necessary for installment purchasing to continue as it has in the 
past and not be restricted ? 

Mr. Davis. I would think it would be, sir. 

The Chairman. You think that anything that would prevent or 
seriously hinder installment purchasing of automobiles would make 
it more difficult if not impossible for you tp market the number of 
vehicles you contemplate producing? 

Mr. Davis. I would think that would be right, sir. 

The C hairma n. You don’t see any danger in the present amount of 
installment purchasing? 

Mr. Davis. I would have no opinion on that. 

The Chairman. You wouldn’t have any opinion on it? 

I wonder if either one of the gentlemen accompanying you would 
like to express a view on it?. 

Mr. Donovan. I don’t think so. 

The Chairman. Do you see any danger in the trend toward higher 
cost of money, or higner interest rates in installment buying that 
would possibly deter installment purchasing? 

Mr. Davis. No, sir, I don’t. 

The Chairman. You don’t see‘anything in that yet? 

Mr. Davis. No, sir. 

The Chairman. You do realize that the interest rates have con¬ 
sistently gone up? 

Mr. Davis. Yes, sir. 

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The Chairman. And that of course is reflected in higher rates to the 
people who buy their automobiles. 

Mr. Davis. That is right. 

The Chairman. But you don’t think it has reached the point yet to 
where you would consider it a danger or deterrent? 

Mr. Davis. No, sir, I do not. 

The Chairman. Now, tractors of course are sold almost exclusively 
to the farmers, aren’t they ? I mean, the larger portion of them ? 

Mr. Davis. Yes, sir. Our tractor business has shifted in the last 
few years. Formerly we made a great many tractors that were used 
in shop service, but with the expansion of the tractor market, our 
tractors are perhaps 90 percent used for farm work at the present 
time. 

The Chairman. Do you see anything in the future that indicates to 
you that the farmers will get tractors cheaper than they are getting 
them now? 

Mr. Davis. No, sir, I do not. 

The Chairman. What is the solution of the farmer’s problem then, 
Mr. Davis? They can’t continue to pay more and more for everything 
they buy and receive less and less for everything they sell and still 
continue to buy tractors. 

Mr. Davis. Well, of course, Congressman our tractors are priced, 
based on our costs. Costs are continually going up, as you well know. 

The Chairman. Are you alarmed about the farm situation as it 
might possibly affect our entire economy, including the automobile and 
tractor production business? 

Mr. Davis. I am in no position to offer an opinion on that, sir. I 
do not know. All I do know is this, that the sale of farm implements 
in the last 2 years has been somewhat less than it had been prior to 
that. 

The Chairman. With your company, or with all companies? 

Mr. Davis. With all companies. 

The Chairman. Do you have a figure in mind that would indicate 
the percentage? 

Mr. Davis. No. I have no direct figure in mind. 

The Chairman. Would it be 10 percent less the last few years? 

Mr. Davis. I think it would be slightly more than that. My in¬ 
formation on it comes from reading the Journal and other papers, of 
course. 

The Chairman. Was it more in 1953 than in 1954? 

Mr. Davis. There were more sales in 1953,1 believe. 

The Chairman. More reduction. Was the reduction in 1954 greater 
than in 1953 ? 

Mr. Davis. I wouldn’t know from the broad coverage. I would 
know what happened in our particular company. We changed models 
at that time ana we had a very good year, generally speaking. 

The Chairman. Has the consumption been off in 1955, likewise? 

Mr. Davis. It has been down. 

The Chairman. You attribute that, of course, to the reduced buying 
power of the farmer ? 

Mr. Davis. I would think so. 

The Chairman. I know how popular your automobile is, because in 
1928 I was permitted to get the first Ford, model A, to come to the 


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Southwest. I used it to good political advantage. More people came 
to see that Ford than came to see me. That way I got a good crowd 
every here I went. I am indebted to Ford. 

Mr. Davis. Yes, sir. 

The Chairman. You know it had been out of production quite a 
long time, about 18 months and people were waiting everywhere 
waiting to see the model A. 

Mr. Davis. At that time I wasn’t too interested in Ford. At that 
time I was a General Motors employee. 

The Chairman. Would you like to ask any questions, Dr. Moore? 

Mr. Moore. Mr. Davis, you have referred to $2 billion of capital 
expenditures since the war, and made a later reference to an “auto¬ 
mation department,” which was organized in your company to advam» 
the cause of automation. 

I wonder if you could estimate how much of that $2 billion went 
for normal replacement. More explicitly how much of this sum would 
you say originated or grew out of the activities and engineering of this 
special automation project? 

Mr. Davis. I would say automation such as we started in 1952 when 
our engine programs went into full swing in new plants at Cleveland, 
at that time automation cost approximately 25 percent more than it 
you bought the normal machine tools. 

Since then we have standardized a good many elements used in 
automation and the cost is somewhat less, but as I said in my state¬ 
ment, there are very few parts that you can really do a hangup job 
of automating on. I might tell you this: That in our Cleveland and 
Dearborn engine plants we have automated lines on cylinder blocks, 
cylinder heads, connecting rods, chankshafts, and camshafts. That is 
all for the engine. Totally, in the company, perhaps only 6 percent of 
our employees, direct labor employees, work on automated lines. 

Mr. Moore. What percent? 

Mr. Davis. 6 percent. 

Mr. Moore. How many employees does the company have? 

Mr. Davis. About 146,000 hourly employees. 

Mr. Moore. So you mean there would be some 10,000 of those? 

Mr. Davis. That’s right. Mr. Donovan advises me that would be 
on the high side. 

Mr. Moore. You have referred to the combination of standard ele¬ 
ments into transfer and automatic machines. 

I suppose as a converse to that you would say 75 percent on one of 
these automated lines are standard milling machines that might once 
have been operated by a human operator. 

Mr. Davis. That is not quite right, sir. I say that the automation 
costs an additional 25 percent. 

It is true that these in-line or transfer machines in themselves are 
automated between stations, and the automation I speak of is that 
which goes in between these machines. 

For example, a cylinder-block line consists of 71 machines hooked to¬ 
gether automatically. That single machine, as you look at it now, is 
perhaps 1,600 feet long, but it has 71 pieces of automation in between 
these machines. To move the part automatically between the various 
in-line operations, it is that long. 

Mr. Moore. Of the total capital cost of that machine, you would 
say 25 percent was sunk in automation. 


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Mr. Davis. I would like to clarify it for you by saying this, that a 
cylinder-block line producing 140 units an hour at 80 percent effi¬ 
ciency—bear in mind, when I say “80 percent efficiency, it is only 
possible to operate at 80-percent efficiency through use of automation. 
If you had no automation, you would be lucky to get 65 percent effi¬ 
ciency in that line, but the pieces of equipment that lay in between 
these pieces of end-line machinery are the 25 percent in extra dollars 
that I speak of. 

I say that a cylinder-block line not automated would cost $7 million. 
Our first attempt at automation cost us 25 percent more than that. 

Mr. Moore. When you automate a line or reach the decision to do 
so, is it practical to convert an existing plant or do you move from, say, 
Dearborn to Cleveland and then again from Cleveland to Dearborn 
the next time ? 

Do you allow an old plant to sort of wither on the vine and abandon 
it and go out and start fresh building a new automated plant? 

Mr. Davis. That is what we woula like to do. We are not always 
able to do that because of the expenditures. 

You recall, the first line I said we automated was at Cleveland. 
When we put that automation in at Cleveland, there was nobody in 
the business that was selling any equipment in that line. We had to 
go out from—start from scratch and do a good deal of the designing 
ourselves. 

Mr. Moore. Had you been making engines in Cleveland at that 
time ? 

Mr. Davis. No. We had to interest people on the outside to go into 
building of automation equipment, people like the Wilson Co., of 
Detroit. We learned after we made that installation that we had very 
little flexibility, so we set a group to work trying to standardize on 
these automation units. 

We now have standard 3-foot units, 6-foot units, 9-foot units, that 
would either turn the work over, rotate it, or do something to position 
the part. 

As a result of that standardization program we have much more 
flexibility and we can take, for example, a piece of equipment off the 
cylinder-block line and use it on the cylinder-head line. 

The Chairman. Mr. Ensley, would you like to ask some questions? 

Mr. Ensley. Mr. Davis, moving from one location to another in 
the interest of increased efficiency involves, of course, a lot of labor 
adjustments. 

Mr. Davis. Yes. 

Mr. Ensley. How do you approach those problems, the finding of 
new positions for people that were closed out of former operation, 
particularly if the new operation which you are undertaking is located 
in a different geographic region ? 

Mr. Davis. Well, sir, we were in a very fortunate position because 
our company has been expanding since 1949, and we have been build¬ 
ing a great many new plants. 

In Cleveland, where we operate four plants at the present time, we 
had no such problem, because we had no employees in Cleveland. We 
moved people from Eouge to start Cleveland. 

At the Kouge, when we went into the overhead-valve engine job, 
we also had a motor plant at that Eouge that employed a great many 
more people^ making the old L-head motor, than we could use on the 


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new overhead-valve engine. But to supplement that we put the Lin¬ 
coln engine in with it and we used those people. 

Mr. Ensley. And it would be your judgment that in future shifts 
of that type, the employees would be able to adjust, as long as we have 
an expanding economy ? 

Mr. Davis. I am sure that is right, sir. 

One interesting sidelight might be this: 

People that moved over to the new Dearborn engine plant from the 
old Rouge engine plant, as we call it, some of them did not want to go 
on automative lines to begin with, but after they were there a day, you 
couldn’t get them back in their old jobs. 

Mr. Ensley. Would it conceivably involve downgrading if they 
moved from one job to a new job? 

Mr. Davis. We think it would definitely be upgrading because at 
the present time we have many schools, and we are running classes to 
take our normal labor and upgrade it, either make them job centers or 
maintenance people on the higher type jobs. 

Mr. Ensley. Do you find the retraining program that your com¬ 
pany engages in is working successfully ? 

Mr. Davis. That’s right, sir. 

Mr. Ensley. And the people involved, irrespective of their age, 
are able to adapt themselves to new processes ? 

Mr. Davis. That is right, sir. 

I think Mr. Donovan might like to say a word in that respect. 

Coming down on the plane this morning he made a remark to me 
about our seniority employees, and what the approximate ages of some 
of these people are. 

Mr. Donovan. The average length of service of our operators on 
the cylinder-block line and in the new Berwin engine plant is 25 years. 
Those people have been trained in the old processes and then retrained 
to the new processes, and we found that we were able to accomplish it 
with very little difficulty. 

Mr. Ensley. In connection with training and education, on page 
15, you say: 

This is because our national genius has found its clearest expression in indus¬ 
trial and scientific technology. 

From your standpoint, as a user of technicians, scientists, mathe¬ 
maticians, and so forth, are we keeping up in the field of education? 
Some say we are retrogressing. 

Mr. Davis. I don’t think that is at all right. For example, the 
chairman of our board was down at Oak Ridge a few weeks ago, Mr. 
Breech, and we had lunch one day together and he said to me, I saw 
some wonderful goings-on at Oak Ridge in the use of isotopes. I 
would like to send you down there and let you see what they are doing 
with isotopes in the field of gaging.” 

I said, “You don’t have to send me down there. We have them 
here.” 

And I put an exhibit together for him, and certainly we have many 
uses for isotopes in our company that we are presently using and 
will have many more. 

I think it is one of the grandchildren of automation. 

As we go along in this thing, the job you tool today, if you can’t do 
it better tomorrow, you are doing a pretty poor job. We look for 


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good people. If we had people that did a poor planning job, they 
wouldn’t last on their job, Decause we have to be competitive. _ 

Mr. Ensley. Do you find that the pool to draw upon is drying up? 

Mr. Davis. Not at all. We have had no problem in that respect. 
However, we have done a lot of encouraging with various universities, 
and we do have a program with universities, bringing people in each 
year on special courses. 

Mr. Ensley. One of the second needs from the education stand¬ 
point we were told this morning was for the worker to be better 
educated so that he could more satisfactorily make use of the growing 
leisure time that he will get as a result of technological development. 

Do your employees make good use of their leisure time? 

Mr. Davis. Well, sir, our company, as I have told you, has been 
expanding since 1946. I have been with the company since 1949 
myself. I don’t know of any leisure time as far as our employees 
are concerned. We are all working overtime to try to do the job 
we have got at hand. 

Our products are in great demand. For example, we have nine 
new plants to build, and equip by next June. That will keep us busy. 

Mr. Ensley. On page 13, you mentioned that “during 1954 total 
man-hours worked were 14 percent greater than in 1950, an increase 
greater than the increase in our unit of production.” 

Mr. Davis. Yes, sir. 

Mr. Ensley. Could you explain that by the fact that you are getting 
out a different unit product today than you did in 1950? 

Mr. Davis. That is right. One of the problems of course that we 
run into is our product changes: Our products are getting more 
complex. Each year we do something to it to make it more competi¬ 
tive, and we raise horsepower the same as our competitors. But 
there are more work unite in that product than there were 5 years 
ago. Consequently, our older plants are getting smaller each year 
for the product we have to build. 

Mr. Ensley. Thank you, Mr. Davis. 

The Chairman. Senator Watkins was unable to come back here 
from Utah today for this hearing, but Mr. Frischknecht, his admins- 
trative assistant, is here, and I wonder if he would like to ask a 
question. 

Mr. Frischknecht. Mr. Chairman, Senator Watkins was sorry he 
couldn’t be here today. He has been down at the National Mining 
Conference, where he delivered an address. He is on his way now 
to the National Reclamation Association Convention in the Mid¬ 
west. He asked me if I could cover the hearings for him. He had 
some questions he wished to present to the witnesses who appeared 
before the committee, and my only job here today will be to present 
some of these questions in the hopes that we can perhaps highlight 
some of the testimony of the witnesses, and perhaps also gain some 
information for the record not contained in these statements. 

Mr. Davis, what is it primarily that has brought about this thing 
we call automation, and the rate of introduction of these new in¬ 
novations? You said something about competition; perhaps some¬ 
thing about the fact that we may be in a buyers’ market as far as 
your commodity is concerned. Is it that factor more than anything 
else which has made for introduction of automatic equipment? 


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Mr. Davis. I think to begin with the word “automation” is very 
much misused and perhaps misunderstood. I think, I like to think 
the first use of automation I can remember was perhaps little David 
when he slew Groliath with the slingshot. It was better than throw¬ 
ing rocks. I recall in the 1920’s, when I was with Cadillac division 
of General Motors, our production was small, yet, we were eager just 
as anybody else was to save a penny per unit if we could. 

Everybody was anxious to save money. At that time, I happened 
to be a machine designer. We were having trouble with connecting 
rods. We had 6 people on the job, on a milling operation and I 
was told to go down and take a look at the job and see what I could 
do to reduce the labor on the iob. 

It was relatively simple thing to do. I took the overarm on the 
milling machine and put spring clamps on it. As the worker laid 
the pieces on they automatically clamped themselves as they went 
through the cycle. That is just as true automation as we are doing 
today. Automation is grossly misunderstood. 

Mr. Frischknecht. Isn’t the evidence of that fact as far. as the 
automotive industry is concerned, particularly your company, the in¬ 
dication you made with respect to the capacity of your plants, in 
which you are utilizing some of these automatic processes, is rela¬ 
tively limited, isn’t it? 

Mr. Davis. That is right. As I say, 6 percent of our employees. 

Mr. Frischknecht. There will be some people who have suggested 
that one reason for the rather rapid rate of introduction of some auto¬ 
matic equipment has been due to labor difficulty. Has your organi¬ 
zation experienced any type of labor difficulty in the collective-bar¬ 
gaining process, and so forth, which might serve as an inducement 
to the Ford Motor Co. to give some thought to the introduction of 
this type of equipment in order to eliminate certain workers and 
certain job processes? 

Mr. Davis. No. I think that definitely has no bearing on it. After 
all 

Mr. Frischknecht. It hasn’t been a major factor? 

Mr. Davis. It hasn’t been a major factor; no, sir. 

You can’t bury your head in the sand to progress. If a machine- 
tool manufacturer comes out with something better than he did last 
year and it saves us money, your competition is going to buy it if you 
don’t. 

Mr. Frischknecht. Isn’t this essentially true also, in the automo¬ 
tive industry in general ? 

Mr. Davis. Yes; I would say so. 

Mr. Frischknecht. You came out with a 202 horsepower here that 
is a little bit ahead of the automobile I bought a few weeks ago, much 
more expensive than your Ford. Isn’t that part of the process here 
in the drive and the interest shown in automatic equipment? 

Mr. Davis. Yes; I would think so. 

Mr. Frischknecht. What about this matter of assistance to dis¬ 
placed workers? We have heard also a lot about the number of em¬ 
ployees displaced through the introduction of this type of equipment. 
You indicated as far as Ford Motor Co. was concerned, it actually 
has affected a very small number of your employees; that all of them 
had been absorbed in other lines, and if not through a retraining 
program? 

Mr. Davis. That is right. 


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Mr. Frischknecht. Have you folks established a definite retraining 
program for employees who, due to age or lack of certain abilities, 
are required to operate some of this equipment? Have you instituted 
a rather formal program and perhaps a reemployment program for 
those people? 

Mr. Davis. Would you like to answer that, Mr. Donovan? 

Mr. Donovan. In addition to on-the-job training, as we move em¬ 
ployees from the old system and put them on the new system, special 
courses of instruction were developed. For example, in the engine¬ 
manufacturing operations, a machine-tool familiarization course wa& 
developed that involved presentations by 15 different machine-tool¬ 
building companies to approximately 500 job setters and job foremen. 
Each one of these presentations lasted for approximately 1 y 2 hours 
and was intended to familiarize these key employees with the new 
equipment. Training courses were also developed for maintenance 
personnel, including courses of hydraulics, quality, lubrication, elec¬ 
trical and electronics, and an overall special program on automation. 

Our training is developed primarily for the maintenance people and 
the foremen. 

We experience no difficulty in moving the production workers from 
the old system to the new. 

Mr. Frischknecht. Mr. Davis, as a result of the experience of Ford 
Motor Co. in this field, and of your acquaintanceship with the general 
problems in the automotive industry, do you believe, or do you have 
any reason to believe, that perhaps some type of national or Federal 
regulation, or legislation—not regulation, but legislation—might be 
desirable in terms of facilitating some of these adjustments that em¬ 
ployees have to make? In other words, is there a problem of any 
real great magnitude ? 

Mr. Davis. No. I certainly don’t think it would be desirable. 

Mr. Frischknecht. In other words, you feel as far as you are con¬ 
cerned, that the Ford Motor Co. itself can take care of this problem? 

Mr. Davis. I feel this way, sir: All you have to do is look across 
the water and see what they are doing in France, Germany, and 
England in automation. After all, we have got to compete with them, 
too. The Renault plant in Paris is more highly automatic than any¬ 
thing we have got m this country in the automotive business. 

Mr. Frischknecht. I am speaking of employees of the Ford Motor 
Co. Do we need perhaps to increase the period during which these 
people might be able to draw unemployment compensation—legislate 
with respect to wages and hours, legislate with respect to perhaps 
special maintenance funds for these people during periods of retrain¬ 
ing, or looking for new jobs or anything along that line that we need 
to give some thought and attention to here at the congressional level ? 

Mr. Donovan. We see no particular need at the moment for legis¬ 
lation along those lines. 

Mr. Frischknecht. What has been the reaction of the labor or¬ 
ganizations as far as Ford Motor Co.’s activities in this field are 
concerned ? In the collective bargaining process, has there been any 
great difficulty with respect to providing perhaps with company help 
and assistance for these people, as a condition of labor contract? 

Mr. Davis. None that I know of. 

Mr. Frischknecht. In other words, so far as you know, the union 
people concerned, and with whom you deal, this is not a problem ? 


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Mr. Davis. That is right, sir. 

Mr. Frischknecht. Now just one or two very general questions 
with respect to the market for automobiles and tractors. 

I certainly think it is true that farmers can’t buy tractors and auto¬ 
mobiles or anything else unless they have the wherewithal and the 
purchasing power to do that with, but these tractors are durable goods; 
aren’t they? 

Mr. Davis. Yes, sir. 

Mr. Frischknecht. And they are goods which some farmers, if 
they take good care of them, would exercise fairly good maintenance, 
last a fairly long period of time. 

Mr. Davis. That is right, sir. 

Mr. Frischknecht.. Is there any reason to suspect in the light of 
these facts, that we ought to anticipate an increase in sales of tractors 
to our domestic farmers each year? For instance, our farm popu¬ 
lation is declining. Our number of farmers is declining. We have 
in agriculture about one-third of our farmers who produce about 85 
percent of our marketable crop. These are the people who are buying 
the traffic. It is not the two-thirds producing little or nothing for 
commercial sale. We think of the number of tractors, and the number 
of tractors that have been sold since the end of World War II, and 
is there any reason to expect that farmers each year ought to buy 
an increasingly large number of tractors and other farm equipment? 

Mr. Davis. I wouldn’t have any opinion on that, sir. I am in no 
position to even hazard a guess. 

Mr. Frischknecht. This matter of installment buying as it relates 
to the automotive industry: Don’t you think perhaps that full employ-* 
ment, relatively high wages, which are, I think, evidenced through 
the fact that our consumer expenditures, the last, particularly the 
last, I guess, 7 or 8 years here have almost set record levels during 
the last 2 or 3 quarters—isn’t that an evidence of the fact that a great 
amount of the purchasing of automobiles, et cetera, still comes from 
good, hard cash? 

Installment buying is up, yes; but is there anything to be really 
concerned about ? Certainly the Ford Motor Co. is concerned about 
sales and about the type of people buying their products, and being 
able to project what your sales might be. You indicated that in 1955 
you thought you would build about 8 million passenger cars. By 
1957 you thought perhaps 9 million. Then you folks must have given 
some thought and attention to where the money is coming from, will 
it come from credit, or wages and salaries, or just where ? 

Let me put my question perhaps this way: If you are anticipating 
selling 9 million cars in 1957, you see no danger in installment credit 
buying today, do you, which might lessen your opportunity* to sell 
those 9 million cars by the automotive industry in 1957 ? 

Mr. Davis. I am having trouble answering your question for the 
simple reason that, looking at the history of our company in the last 
few years, we have been able to sell everything we could produce. We 
have been running, in a great many instances, 6 days a week to build 
all we could. We are riding high, and hope to continue to ride hig h, 
because we think we have got a good product, but I can’t associate any 
answer that I might give you with credit buying. 

I know nothing of it, and am in no position to answer you. 


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68 AUTOMATION AND TECHNOLOGICAL . CHANGE 


Mr. Frischknecht. I realize that. I think perhaps these gentle¬ 
men’s questions relating to the farmer and to installment- buying are 
perhaps a little far removed from this subject matter of the hearing 
on automation. I know if Senator Watkins were here he would want 
to thank you for your very fine statement. I am only sorry he is not 
here personally to hear your statement. 

Mr. Davis. Thank you. 

The Chairman. Have you any estimate for 1958 ? Mr. Davis, for 
production of automobiles? 1957 and 1956, you estimated 8 million 
cars. 

Mr. Davis. That is right. We think- 

The Chairman. 1957, 8 million. 

Mr. Davis. Yes. 

The Chairman. What do you predict for 1958 ? 

Mr. Davis. Truthfully, Congressman, I haven’t looked that far 
ahead. I do know this: That we are planning for next year on a vol¬ 
ume in excess of what we had this year for ourselves. 

The Chairman. For yourselves. 

Mr. Davis. We all know that this 8-million-car year which we have 
this year is considerably more than we thought we would have a year 
ago. We all thought 5% million. Here we are selling 8 million cars 
this year. 

Whether it will continue, I don’t know. Our sales department is 
like any other sales department, of course. They think they are going 
to sell our share, at least. 

The Chairman. What percentage of the automobiles are sold on 
installment plans? 

Mr. Davis. I couldn’t answer that question, sir. I don’t know. 

The Chairman. Is anyone with you in position to answer that? 

Mr. Davis. I am afraid not. 

The Chairman. But you do know without installment buying you 
could not market and seU 8 million cars in a year ? 

Mr. Davis. That is right, sir. 

The Chairman. You are depending upon installment buying to 
continue as it has in the past, without any unnecessary restrictions 
or limitations? 

Mr. Davis, would think so, sir. 

The Chairman. In other words, without that you could not expect 
to produce and sell 8 million cars next year and 9 million the next? 

Mr. Daves. I am sure that is right. Of course the 8 million I speak 
of is industrywide. It isn’t Ford’s share by any means. We wish it 
were. 


The Chairman. Personally I think installment buying is about the 
healthiest part of our economy. 

Mr. Daves. I would think so, sir. I can remember when I was quite 
young, many of the things I have today I wouldn’t have had unless 
I went out and bought them on time. 

The Chairman. That is about the only way a poor fellow can 
save. 

Mr. Davis. That is right. 

The Chairman. Installment credit is a poor man’s money and 
without the poor man buying you couldn’t sell half the cars you do. 

Mr. Daves. That is rignt. 


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Mr. Frischknecht. If Senator Watkins were here, I think he 
would want to add this comment, Mr. Chairman, that one of the 
healthful things he sees in the economy is the highest number of 
people ever employed, with the highest total wages ever paid. 

Mr. Davis. That is right, sir. 

Perhaps Mr. Donovan might want to make some comment on the 
increases that we have paid our hourly rate employees from 1953. 

Mr. Donovan. Our hourly labor bill has increased approximately 
45 percent since 1950. 

The Chairman. Since 1950? 

Mr. Donovan. That is right, sir. 

Mr. Frischknecht. Of course, you are paying for better skilled 
and better trained employees. 

Mr. Donovan. We think we have the best employees in the industry. 

The Chairman. Mr. Davis, we, of course, appreciate your coming 
here anyway, but we particularly appreciate your coming in view of 
the fact that you suffered a broken arm. Thirty years ago we would 
have suspected that you might have gotten that broken arm cranking 
a private car. A lot of people then, you know, were going around 
with broken arms. 

Mr. Davis. Thank you, sir. 

The Chairman. We are glad we don’t have to crank those cars now 
and don’t have to park them on hills. 

Mr. Davis. Right, sir. 

The Chairman. The committee will stand in recess until tomorrow 
mornin g a t 10 o’clock, at which time we will hear in this room Mr. 
Robert W. Burgess, who is Director of the Bureau of the Census. 

(Whereupon, at 3:18 p. m., the committee adjourned to reconvene 
at 10 a. m. the following day, Saturday, October 15, 1955.) 


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SATURDAY, OCTOBER 15, 1955 


Congress of the United States, 

Subcommittee on Economic Stabilization of the 

Joint Committee on the Economic Report, 

Washington, D. G. 

The subcommittee met at 10 a. m., Hon. Wright Patman (chairman) 
presiding. 

Present: Representative Wright Patman, chairman of the commit¬ 
tee (presiding). 

Also present: William H. Moore, staff economist, and Grover W. 
Ensley, staff director. 

The Chairman. The subcommittee will come to order. 

Mr. Burgess, as Director of the Census, you have always been most 
helpful to this subcommittee in its efforts to improve the statistical 
program of the Federal Government, especially in respect to unem¬ 
ployment and related statistics. 

Through all of these years the Bureau of the Census has been gain¬ 
ing experience with electronic computing equipment. I am told, in¬ 
deed, that several of the principal types of computing machines, 
actually originated in the Bureau of the Census, ana that the Bureau 
has for some decades been one of the greatest users of such equipment 
in the country. The Bureau has at least two of these newest type 
computing machines. I am sure that if we understood only a small 
part of what Dr. Burgess and his staff have learned about these 
instruments, we would be in a far better position to appraise the 
probable effect of automation upon office work and data-processing in 
the years ahead. 

Mr. Burgess. For the record, Mr. Morris Hansen, Assistant Direc¬ 
tor of the Census Bureau for Statistical Standards and immediately in 
charge of our electronics computing equipment, is familiar with the 
way it works out, and his suggestions have been incorporated in our 
statement, and Mr. McPherson is with Dr. Hansen, sitting on my right. 
He is on the same staff. He has long experience on the same line, being 
very close to the electronic machinery. 

The Chairman. We are very glad to have you, Mr. Burgess. 

You may proceed in your own way. 

Mr. Burgess. I have a prepared statement. 

In the first statement I explain my participation in this work, and 
call attention to the fact that some of the statistics gathered by the 
Bureau of the Census deal with machinery; so I cover that material 
as well, as well as some general remarks. 

71 


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I think since this matter sets somewhat complicated, and we are 
trying to provide a balanced point of view, I would like to present 
the important features consecutively. *1 will read through my paper, 
if that is agreeable to you, and then have the questions and discus¬ 
sion more or less afterward, although if you or other members of the 
subcommittee wish to interrupt at any time, that would be acceptable, 
of course. 

The Chairman. That will be very satisfactory. 

STATEMENT OF BOBEBT W. BTJBGESS, DIBECTOB, BUBEAXT OF THE 

CENSUS, DEPABTMENT OF COMMEBCE; ACCOMPANIED BT M. H. 
HANSEN, ASSISTANT DIBECTOB FOB STATISTICAL STANDABDS, 

AND JAMES L. McPHEBSON, MACHINE DEVELOPMENT OFFICEB, 

BTJBEAU OF THE CENSUS, DEPABTMENT OF COMMEBCE 

Mr. Burgess. We have had experience with the electronic com¬ 
puters, as you noted. 

My participation in these hearings is in response to a request dated 
July 12 from Mr. Patman as chairman of the Subcommittee on Eco¬ 
nomic Stabilization of the Joint Committee on the Economic Report. 
Mr. Patman requested my assistance in investigating the impact of 
automation on long-run levels of employment together with its effect 
upon economic stability, with special attention to the experience of 
the Bureau of the Census with the installation and use of electronic 
computing and office machines. 

To satisfy this request I shall present an analysis of our experience 
and shall endeavor to relate this experience with these new types of 
mechanization to the general economic history of earlier advances 
in mechanization, especially the effect on employment. I also include 
some examination of the statistical record of the growing importance 
of the manufacture of machinery and equipment in the whole struc¬ 
ture of the American industrial production, and its relationship to 
th e g rowth of other industries. 

While I am tempted to develop the subject by starting at a very 
fundamental level of basic principles, I think it will be better at this 
time to concentrate on exactly what is happening in connection with 
our present applications and to present our judgment as to the extent 
to which we are securing the advantages of more rapid compilation 
at greater accuracy and Towered cost and the extent to which volume 
of employment is reduced or its character modified. 


CENSUS EXPERIENCE WITH LAR GE-S CALE COMPUTERS 

The world’s first large-scale electronic computing system for data 
processing, the Univac, was delivered to the Bureau of the Census 
m April 1951, just as the tabulating load of the 1950 Censuses of 
Population, Housing, and Agriculture was reaching its peak. This 
system was capable of absorbing information from magnetic tape at 
tthe rate of 10,000 decimal digits per second, adding 11 digit numbers 
:at the rate of 2,000 per second, comparing numbers in order to classify 
reports at a rate in excess of 1,000 per second, and recording the results 
on magnetic tape as fast as it could read in new data. Moreover, the 
•central,computer could be made to remember all the steps which had 


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to be carried out in order to classify an individual’s census report into 
all the many categories which were to be tabulated for small areas, 
and to carry out this sequence of steps automatically. But the auxil¬ 
iary equipment which fed the data to the computer and the equipment 
which translated the results from magnetic tape to readable form 
were at that time no match for the computer in speed and reliability. 
Moreover, no one then had any real experience in using large-scale 
electronic equipment on data compiling problems. In any event, 
although the Univac did handle what might be considered a large 
job when viewed alone, it processed only a small part of the mammoth 
1950 Census of Population and had very little effect on the number 
of people we hired, although it did help us to close out the job in a 
more orderly fashion because it began to take up more and more of 
the load as our temporary workers left the job. 

By 1953, as the auxiliary equipment improved and our own experi¬ 
ence increased, we began to use Univac more effectively on our current 
work. As you know, the Bureau of the Census is busy collecting a 
vast amount of statistical information even when it is not taking a 
population census. Each month we process sample information on 
retail and wholesale trade and on the employment status of ourpqpu- 
lation, as well as on the foreign trade transactions of the United 
States, to name but a few of our current activities. We now use 
Univac to tabulate our Current Business Survey, and our Current 
Population Survey, Mid are taking steps to apply it to our Foreign 
Trade Statistics program. The use of this automatic equipment has 
not only enabled us to produce more timely statistics at lower cost, 
but has had the important effect of leveling off our requirements for 
clerical help. 

Perhaps I should make clear the fact that a computer can be in¬ 
structed to perform, and has the ability to carry through, any routine 
clerical operation, either simple or complex. Thus, it can and does 
do the classifying, sorting, and tabulating that are required in either 
sample surveys or complete censuses. With equal ease it carries 
through multiplications and mathematical computing in some of our 
sample operations. Unlike punched card equipment or manual 
methods, however, the large scale computers when properly instructed, 
carry through a whole sequence of operations without manual inter¬ 
vention of any sort, and with great precision as well as at high speed. 
The great flexibility of the machine arises because successive stages 
in the operations can be determined by the results obtained in pre¬ 
ceding stages. 

I have emphasized that last sentence because on some definitions of 
“automation,” that is the key point. 

A requirement to be met in applying computers is that very detailed 
and explicit instructions must oe provided to the computer before 
it will proceed through any operations. A computer, for example, 
doesn’t even know when to start or when to stop except when explicit 
directions covering these elementary functions are included in the 
instructions prepared for it. This applies not only to a complete 
task but to hundreds and sometimes thousands of subparts within 
subparts which, when executed in the proper sequence Dy the com¬ 
puter, result in the solution of a complex problem. The preparation 
of these lists of instructions known as programs involves specially 


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AUTOMATION AND TECHNOLOGICAL CHANGE 

trained personnel with varying degrees of skill. The personnel re¬ 
quirements range from the principal programers who must be 
thoroughly familiar with the problem to which the computer is to 
be applied as well as the logical system and characteristics of the com¬ 
puter to be used, to less skilled personnel who need know only the 
logical system of the computer and be capable of filling in the detailed 
instructions in small pieces of a total program. The less skilled 
personnel need not necessarily understand how the pieces they pre¬ 
pare fit into the large mosaic which makes the whole. 

Many of the personnel needed to perform these functions of general 
and more detailed programing need not necessarily receive an ex¬ 
tended education in these specialized areas. Persons of good educa¬ 
tional background and with aptitude (but not necessarily professional 
training) in mathematics, sciences, engineering, and related fields or 
who have demonstrated ability in planning punched-card procedures 
can be trained in the essentials in a period of several weeks. They can 
acquire experience over a period of several months or perhaps a year 
that will enable them to perform effectively in this specialized field. 

The requirement for personnel to prepare programs will be supple¬ 
mented by the need for operating personnel. Much has been printed 
in the popular press about how automatic and self-contained- these 
devices are. You may have heard how internal checking facilities, or 
checks for accuracy which are included in the instruction program, 
can insure against incorrect results. The very existence of these 
facilities establishes the fact that sometimes checks are not satisfied. 
When this occurs there must be human intervention by an operator. 
The art today has not reached the point at which the equipment can be 
left unattended for periods of even an hour unless the user is willing 
to take a great risk that during a major part of that hour the computer 
will just be stopped waiting for the operator to press the right button 
or take some other action to start it again. Because of the high cost of 
lost time and the need for fairly frequent operator intervention to 
identify and correct difficulties or supply additional input material, 
it is important that operators of large-scale computers be more highly 
skilled and trained than is necessary for more traditional office 
equipment. 

In addition to operators there are needs for maintenance personnel. 
Here, as with program preparation, a wide range of skills will be 
required ranging from engineers who know the design of a computer 
to far less skilled electronic technicians who can be recruited with 
training in other aspects of electronics and provided specialized train¬ 
ing on the computer in a comparatively short period of time, usually 
measured in months. 

These requirements for personnel in the direct operation of com¬ 
puters are, of course, in addition to the personnel engaged jn design 
and construction of electronic computers and components—including 
especially mathematicians, engineers, and other specialists as well as 
workers carrying out routine construction tasks. 

I may interject here a personal note that I was for 28 years a stati- 
cian and economist for the Western Electric Co., and I wanted to 
make sure that the manufacturing companies’ need for people was 
mentioned here. 

Thus, in addition to personnel required in the design and construc¬ 
tion of computers, these new data processing facilities will create job 


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opportunities for programers, operators, and maintenance personnel 
while tiie computers take over many clerical tasks. 

Practically all of our staff working in these various types of posi¬ 
tions represent persons with appropriate background and aptitudes 
who were working in the Bureau of the Census prior to our acquisi¬ 
tion of the computer, and who have been trained and have developed 
the necessary experience while on the job in the Census to carry on 
effectively in the new type of function. We have had to hire from the 
outside only one or two who were already experienced in one of these 
fields. 

For a fixed amount of work there may sometimes be a net reduction 
of substantial proportions of the total personnel required. The re¬ 
ductions, however, will be in the number of employees needed to per¬ 
form routine work and any such reduction can well be a blessing in 
the long run, although it may cause short-run dislocations and prob¬ 
lems that will deserve serious attention. Here, perhaps, we can draw 
an analogy. The modern telephone exchange is an excellent example 
of a specialized automatic data processing system. We supply it with 
some information by twisting a dial and it automatically (i. e., with 
the aid of elaborate “machine switching” equipment and electric 
circuits) selects the correct one of many thousand possible telephones 
to connect us with. It is difficult to imagine how many fewer 
telephones would be in use today if we were still dependent for thk 
service on the pleasant voiced young lady who used to say “number 
please” when we picked up our receiver 30 years ago. Certainly the 
radical reduction of the need for the routine task which such girls 
performed has not resulted in insufficient opportunities for tiieir 
employment in the long run. 

We find that the savings through the application of computers to 
clerical work varies widely depending on the nature of the job. On 
some jobs small in size the work of preparing instructions for the 
computer can exceed the work required to do the job by less automatic 
methods. Also, some of our operations that involve only compara¬ 
tively simple manipulation of data can be accomplished with greater 
economy either manually or on punched-card equipment than on our 
computer. 

For example, one may have a set of records that need to be placed 
into sequence on the basis of an identification code, say of six digits.. 
At the present state of development a few punched-card sorting ma¬ 
chines that cost much less to maintain and operate than a large-scale- 
computer can sort cards into sequence at considerably less cost than 
would be involved by using one of our computers to accomplish the 
sequencing. Jobs involving large amounts of such sorting and only 
limited additional operations may yield little or no gains when placed 
on a computer. 

On the other hand, we have found that many operations can be 
carried through on a computer at substantially lower costs than those 
incurred when the work is done by the alternative methods available 
for use. On a number of what we regard as successful applications of 
the computer to the compilation of data we have found that for 
selected types of operations the computer has resulted in reductions, 
of cost of from 25 to 75 percent. 

I admit that is quite a range, and Mr. Hansen may be called on. 
later to see where that can be narrowed down. 

45006 0—59 - ,6 


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For example, about $55,000 of the funds appropriated to our Bureau 
for fiscal 1953 was to defray the cost of tabulating our Current Popu¬ 
lation Survey on which the Government’s monthly estimates of em¬ 
ployment, unemployment, and other characteristics of the labor force 
are based. 

For fiscal 1955, the first full year this was done on our electronic 
data processing equipment, our appropriation from the Congress 
included about $28,000 for this same work, or just about half of what 
it was 2 years earlier, and a more complex tabulating job was being 
done. This gain is on the selected phases of the tabulation work 
which were transferred to the computer. Far greater gains are 
Achieved on some operations such as mathematical computing in¬ 
volved in some of our sampling work, or in measuring and adjusting 
time series for seasonal variations. Many such operations become 
inexpensive and feasible that would be oi prohibitive cost to carry 
through except on a very limited basis on alternative types of equip¬ 
ment. 

Again, these ratios of gain are not out of line with the potential 
.advantages of punched card equipment at the time it was being de¬ 
veloped and introduced. The advantage or gain from the application 
.of a computer to a job depends, of course, on the skill with which it is 
used, and on the state of development of computers. Advances in 
computer design are being made that will make computers economical 
for types of work for which they are not now as economical as avail¬ 
able alternative methods. 

Perhaps it will be of interest if, by describing one such application, 
J illustrate the types of complex but nevertheless routine clerical func¬ 
tions that the computers perform particularly effectively in census 
work. 

At the present time we have two Univacs, both mainly engaged in 
the processing of the Censuses of Business and Manufactures. This 
is a complicated lob involving reports from more than 3 million 
•establishments. If these reports were all complete and self-consistent, 
and if we made no errors in our office work, the job of getting out the 
census reports would be laborious but straightforward. Unfortu¬ 
nately, some of the reports do contain omissions, errors, and evidence 
of misunderstanding. By checking for such inconsistencies we elim¬ 
inate, for example, the large errors that would result when something 
has been improperly reported in tons instead of hundredweights. 
Perhaps one-third to one-half of the time our Univacs devote to pro¬ 
cessing these censuses will be spent checking for such inconsistencies 
■and eliminating them. 

As an example, let me describe one of the checks we apply to reports 
•on the production of animal feed. In this industry practice varies' 
among manufacturers with respect to the units they use to measure 
"production. Some manufacturers keep production records by hun¬ 
dredweights and others keep such records by tons. 

On the census questionnaire we requested the respondents to report 
^production by hundredweights. We know, however, that some re- 

r idents will report tons. Because the value of the commodity is 
reported to us, we can use our Univacs to detect such misunder¬ 
standings. In effect we tell our computer, in the case of this illustra¬ 
tion, that the wholesale price value of poultry feed’per hundredweight 


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usually falls between $1.50 and $9. The Uni vac is instructed to com¬ 
pute, tor each report of production of poultry feed, the average unit 
value and to compare this with the value range. 

Obviously, if production has been reported in tons instead of 
hundredweights, this computation will result in an excessively high 
unit value. When this happens, our computer is instructed tenta¬ 
tively to assume that the production was reported in tons, not hundred¬ 
weights, and to multiply the reported amount of production by 20— 
the appropriate factor to convert tons to hundredweights—ana then 
recompute the unit value. If this recomputed unit value satisfies the 
check, the electronic* computer has thus automatically corrected an 
error in reporting. If it still does not satisfy the check, our computer 
lists the report as one requiring inspection and correction by a subject- 
matter expert before we c^n include it in our tabulations. Such ex¬ 
ercise of the ability to choose and to act in different ways according 
to conditions is, I think, a good example of automation. 

Similar checking procedures are applied to the approximately 7,000 
product lines for which we have reports. In a like manner we check 
to see whether such relationships as annual man-hours and number 
of production workers, or value of shipments and cost of labor and 
materials, are within reasonable limits for the industry and area 
involved. 

Sometimes a respondent gives incorrect or incomplete information 
about the kind of business in which he is engaged and this might result 
in errors in the classification system on which our tables are based. 
Here again our Univacs are instructed to apply checks designed to 
detect such errors. For example, the Uni vac might determine for a 
business establishment classified as a retail shoe store that employees’ 
salaries amount to 30 percent of total sales. For this kind of Business 
the cost of goods purchased for resale is the major item of expense and 
30 percent for salaries is uncommonly high. Our Univac would list 
this case for inspection, and a review of the report might result in a 
change in classification from “retail shoe store,” to “shoe repair shop,” 
for example. 

The foregoing are simple illustrations of relationships we examine 
to determine the quality of reports to us. These checks are quite 
numerous and frequently very complex. 

On the equipment available in tne past it has been economical to 
apply only relatively simple checks automatically, and we have done 
the more complicated kind of checking by hiring and training enough 
clerks to perform these routine checks on every report. Most reports 
are reasonably straightforward and complete, so that a clerk may come 
to fed like a mere automaton, and develop a tendency to read carelessly. 
Now that we have now put our Univacs to work making these checks, 
we find them doing this sort of thing tirelessly and without forgetting 
any of the special rules that come into action only rarely. Later, after 
the tabulations are carried through, the computer will do much of the 
work of examining the tabulations to insure that the confidentiality 
of census data is maintained and the reports of individual companies 
are not revealed either directly or implicitly. The ability to carry 
through such complex procedures along with the more usual types of 
tabulation operations makes the computer particularly effective for 
some of our work. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


It is not easy to identify particular jobs eliminated in connection 
with the application of computers to census work—many different 
jobs as well as machine rentals are affected. The application of our 
large scale computers to the continuing work of the Census Bureau— 
the continuing work as contrasted with the censuses as such-—has 
made possible reductions in cost of more than $150,000 per year in the 
regular continuing work. 

The computers, in addition, have done extensive service work for 
other agencies. These economies were accompanied by a reduction in 
our regular appropriations, although subsequently there has been 
more than offsetting increases to carry out expanded or additional pro¬ 
jects. Also, we have required a substantially smaller expansion in 
personnel than would otherwise have been needed for processing the 
Censuses of Business and Manufactures that are now in progress. In 
addition, we expect to make results from these censuses available on a 
considerably more rapid time schedule. 

By the time of our next decennial census in 1960, we expect that, 
again, automatic equipment will influence greatly not only how fast 
we do things but how we do them. We foresee equipment which can 
greatly reduce our requirements for a large staff of temporary em¬ 
ployees to convert the information on schedules to holes in cards. In 

E ast decennial censuses we have employed several hundreds of such 
ey punch operators. We are hopeful that in the future, there will be 
available equipment capable of reading marks placed on census 
schedules by our respondents or enumerators. Such equipment would 
eliminate the need for the large staff of key punch operators for a 
short-term job. 

We also foresee the possibility that these new developments may 
well provide the opportunity for us to adopt certain changes in census 
procedures which will greatly improve the timeliness of the figures. 
But with these advances, there still will be a large scale clerical opera¬ 
tion, although substantially reduced in size as compared with carry¬ 
ing through the same work by earlier methods. 


GENERAL REMARKS ON EFFECTS OF MECHANIZATION AND AUTOMATION 

Some more general remarks on the effects of mechanization and 
automation may now be in order. 

The growth in our economy requires ever-increasing productivity 
from each worker. That this demand has been met is due in large part 
to the ingenuity of those who have developed and successfully intro¬ 
duced mechanical devices ranging in complexity from automatic dish¬ 
washers through mechanical harvesters to electronically controlled 
steel rolling mills and oil refineries. Thus our factories, farms,, and 
homes now operate more efficiently in the sense that those who work 
there can spend a larger share of their effort on activities involving 
judgment and intelligence rather than mere brawn and muscular co¬ 
ordination. 

One has only to compare the farm or industrial labor pattern of 
1850 with that of 1950 to see that this relegation of many repetitive 
routine tasks to machines rather than to human beings has had a tre¬ 
mendous effect on our way of life. But even though there have been 
problems and conflict in accomplishing the readjustments that neces¬ 
sarily accompany the developments leading to increased productivity,. 


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the effect has actually been more of an evolution than a revolution. 
And in spite of the growing capabilities of mechanical equipment, 
man has always been able to make the machine his servant rather than 
his competitor. 

Until very recently the development of machines to lighten the 
white collar workers’ load has been overshadowed by the development 
of devices to relieve man’s back, rather than his mind, of drudgery. 
Nevertheless, the typewriter, adding machine, punched card equip¬ 
ment, and other office devices which are now in common use were just 
as important developments for office work as the tractor has been to 
the farm. 

Machines which can handle the drudgery of the office as efficiently 
as machines which can handle the drudgery of factory, farm, and 
home are now arriving on the economic scene. Does this mean that 
routine office workers will vanish from the streets of our cities the way 
that pitchfork wielding farmhands have vanished from the Mississippi 
Valley? Possibly, yes, but not in a few short years and perhaps not 
in our lifetime. We can confidently expect that advances in automa¬ 
tion in this field will make it possible to supply types of information 
which have long been needed but which could not be economically 
provided. The transistor, the magnetic core, and the vacuum tube 
undoubtedly will greatly reduce the work of many large-scale clerical 
positions. Experience here may be similar to that when punched card 
equipment was introduced. 

In the early nineteen hundreds, the demands for information could 
not be met by hand methods. This inability to meet need led to the 
development and introduction of punched card tabulation and ac¬ 
counting methods. The census played an important and leading role 
in this development. But the development has not displaced people— 
instead the lower costs and increased possibilities for timely informa¬ 
tion has made it possible to meet more of the demand for increased 
facts to guide decisions by American businessmen and governments. 

The result of this along with other factors has been an increase in 
the proportion of the labor force in clerical occupations from about 3 
percent in 1900 to 12 percent in 1950. Thus, there is every reason 
to believe .that the development of cheap and versatile electronic data 
processing machines will not be accompanied by a major reduction, if 
any, in the number of office jobs. 

Employment statistics support the view that, while advances in 
science and technology may cause declines in some areas of employ¬ 
ment, over the long term they create greater increases in others. Tne 
number of employed persons in 1940 was 44,900,000; in 1950, it was 
56,200,000—a gain of 25 percent in a period of unusually rapid scien¬ 
tific development. 

These figures show that in spite of the installation of improved 
machinery, more workers were required to produce the amount of 
goods and services wanted. It is interesting to compare the increase 
in demand as well as in population with the 25-percent increase in 
employment during the 1940’s. Measured in 1954 prices, the Nation’s 
output of goods and services increased about 55 percent between 1940 
ana 1950, accompanied by an increase of 15 percent in population. 

The gain in employment is interesting because as the decade began 
many people were concerned about machines displacing men. And it 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


is especially interesting that some of the industries that introduced 
new machines employed substantially, more .people in 1950. than in 
1940. The telephone industry, for example,- which put in the dial 
telephone and displaced many operators, nearly doubled its employ¬ 
ment between 1940 and 1950. 

Over the 10-year period, workers shifted from one industry to an¬ 
other and from one occupation to another. Some of these shifts, no¬ 
doubt, resulted from .the introduction of machines. For example^ 
there was a marked drop in employment on farms and in private- 
households. Much of the work formerly, done manually in these- 
places is now done more efficiently by machinery either in shops or on. 
the farm or in the home. 

Where did the farm and household workers go? If they did not. 
drop out of the labor force, they probably went into the industries 
where employment was expanding. Manufacturing had an increase* 
of 4 million workers, 38 percent; wholesale and retail trade an in¬ 
crease of 3 million, 40 percent; and services outside private households 
had an increase of 2,700,000,35 percent. 

Specific industries with the largest increases were: retail trade; 
construction; professional and related services; public administra¬ 
tion ; manufacturing of machinery; wholesale trade; transportation ; 
metal manufacturing; finance, insurance, and real estate; repair serv¬ 
ices ; and telecommunications. 

Increases in some of these industries appear to be directly related 
to increases in many parts of the economy in the use of automatic 
equipment. For example, increases in professional services, in ma¬ 
chinery manufacturing, in metal manufacturing, and in repair serv¬ 
ices can fairly be ascribed, at least partially, to an increase in the de¬ 
mand for persons to design, manufacture, and repair automatic equip¬ 
ment for applications in many different types ox activities. 

Shifts in occupational groups are particularly interesting. The 
major declines were in farmers and farm managers, farm laborers, 
and private household workers. Substantial increases, on the other 
hand, were recorded for semiskilled operatives, for clerical workers, 
and tor skilled craftsmen and foremen. Smaller increases occurred 
in nonfarm managers, officials, and proprietors, in professional and 
technical workers, in service workers outside private households, and 
in sales workers. All of these are higher-paying occupational classi¬ 
fications than laborers and private household workers, so it appears 
that opportunities for more desirable jobs have been created. 

Since 1950, employment has continued to increase, according to 
figures from the Census Bureau’s Current Population Survey. The 
number of agricultural workers has further declined. The greatest 
increases have been in professional and technical workers, in semi¬ 
skilled operatives, and in skilled craftsmen and foremen. 

A long-range view of the growth of employment in the machinery 
industries is given by the Censuses of Manufacturers and the Census 
Bureau’s Annual Survey of Manufactures. Manufacturing has 
taken tremendous strides since 1900, and the machinery industries 
have progressed faster than the average. I have tables and a chart 
at the end of this statement that points these items up. 

In 1899, some 4y 2 million production workers were employed in 
manufacturing industries. In 1953, three times that number worked 


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81 


in manufacturing, although population had only doubled between 
1900 and 1950. The machinery industries showed even greater gains. 
In 1899; some .400,000 production workers were employed in the ma¬ 
chinery industries; in 1953 more than five times that number were so 
employed. In 1899, production workers in the machinery industries 
were about 9 percent of the production workers in all manufacturing 
industries; in 1953, they had climbed to 16 percent. The manufac¬ 
ture of machinery and equipment has thus grown in importance 
within the whole structure of American industrial production. 

Largely because of the record of past changes and the accompany¬ 
ing circumstances as I have observed them, I do not expect the further 
development of machines to reduce the number of jobs over the long 
term. Furthermore, in my judgment, the new jobs will be less 
arduous, more satisfying to the individual, and better paying. Not 
only have new types of machines resulted in increased production, 
but they have enabled us to make more goods in fewer hours of work 
so workers have had more opportunity to engage in recreational and 
cultural activities. These in turn have created further demand for 
goods and services. The characteristic effects of new machinety on 
production and employment in the past seem to me very similar in the 
main to what we are currently seeing for electronic computers and 
can reasonably expect in the future. 

The Bureau of the Census will very soon publish statistics from the 
1954 Censuses of Agriculture, Business, Manufactures, and Mineral 
Industries. These censuses should provide a wealth of information 
which will show substantial progress in the production, use, and ef¬ 
fects of laborsaving machinery. 

SUMMARY 

In summary, I believe that automation applied to data processing 
may well be accompanied by a net increase in the overall demand for 
workers as well as an improvement in the opportunity for the worker 
to make fuller use of his talents. There seems to be no reason to ex¬ 
pect a change in the historical pattern of growth of demand for work 
output more than offsetting the reduction of man-hour requirements 
to accomplish the work originally required. Our country appears 
to be in an era of rapid growth. The development of new industries, 
the increasing productivity, the growth of the population, the aver¬ 
age citizen’s desire for new products and more old products ? the wide¬ 
spread business confidence, the recognition of responsibility by the 
Government to promote sound economic growth under the Employ¬ 
ment Act of 1946, all promise a continuous expansion of our economy. 

Although automation may lead to some serious short-run disloca¬ 
tions in particular industries and particular parts of our country, it 
seems to me that, in the long run, it will facilitate and promote the 
general expansion. 

As has happened in the past, personal requirements while un¬ 
changed in total may undergo changes in types of assignments. This 
can create real problems which call for skillful handling and under¬ 
standing of human relations as well as economic problems in making 
the adjustment between the different types of workers required on the 
new and the old bases. It is obvious that the organization that tried 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


to adopt a hard-boiled attitude toward its original workers would 
lose in workers resentment and public disapproval as well as in loss of 
related knowledge and skills that can be converted for valuable appli¬ 
cation in the new areas. 

I think we can say that “automation” is a new word for a now 
familiar process of expanding the types of work in which machinery 
is used to do tasks faster, or better, or in greater quantity. For a 
century or so we have been adjusting to more and more mechaniza¬ 
tion. We have thrived and grown great partly because of this, cer¬ 
tainly not in spite of it. 

{The charts referred to above are as follows:) 

Production workers in machinery industries and in all manufacturing 

industries, 1899-1958 

[In thousands] 


Year 

Total man¬ 
ufacturing 

Machinery industries 

Total 

Electrical machinery 

Other machinery 1 

Number of 
production 
workers* 

Percent of 
total man¬ 
ufacturing 

Number of 
production 
workers 



Percent of 
total man¬ 
ufacturing 

1953. 

13,501 

2,158 

16.0 

851 

6.3 

1,307 

9.7 

1947. 

11,916 

1,883 

15.8 

639 

HQ 

1,244 

10.4 

1939. : 

7,808 

784 


248 


536 

6.8 

1929-. 

8,370 

1,091 

13.0 

343 

HU 

748 

8.9 

1919. 

8,465 

998 

11.8 

241 

2.9 

757 

8.9 

1909.— 

6,262 

568 

9.1 

92 

1.5 

476 

7.6 

1899. 

4,502 

414 

9.2 

43 

1.0 

371 

8.2 


i Includes engines and turbines, tractors and farm machinery, machine tools, textile machinery, pumps 
and compressors, office and store machines, sewing 'machines, etc. 

* Figures for 1899-1929 are not entirely comparable with those for 1939-63, largely because the earlier figures 
include boiler shop products and foundry products. These industries were not classified in machinery in¬ 
dustries after 1931. 

Source: U. S. Bureau of the Census, Census of Manufactures, 1899,1909,1919,1929,1939,1947. 1953 An¬ 
nual Survey of Manufactures. Figures for total machinery industries for 1899-1929 compiled by Harry 
Jerome from the Census of Manufactures and published in Mechanization in Industry (National Bureau 
of Economic Research, 1934), p. 232. 


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PRODUCTION WORKERS IN MACHINERY INDUSTRIES AS PERCENT OF PRODUCTION WORKERS 
IN ALL MANUFACTURING INDUSTRIES, 1899-1953 



1890 1900 1910 1920 1930 1940 1950 19^ 


l/ Figures for 1899-1931 are not entirely comparable with those for 1933-1953> 
largely because the earlier figures include boiler shop products and foundry pro¬ 
ducts. These industries were not classified in machinery industries after 1931* 

Sources: U. S. Bureau of the Census, Census of Manufactures, 1899 , 1904, 1909/ 
1914, 1919>1921, 1923, 1925, 1927, 1929, 1931, 1933, 1935, 1937, 1939, 1947. 

1953 Annual Survey of Manufactures. Figures for all mac hine ry industries for 
1899 - 1929 - conqpiled by Harry Jerome from the Census of Manufactures, and published in 
Mechanization in Industry (National Bureau of Economic Research, 1934), p. 232. 

The Chairman. That is a very fine statement. We appreciate it 
very much, Mr. Burgess. I notice you have a table there. Do you 
want to explain that? 

Mr. Burgess. Yes. The table accompanies the remarks, where I 
made some comments as we went along. On page 14, we show pro¬ 
duction workers in machinery industries and in all manufacturing 
industries, comparing the period 1899 to 1953. The years are years 
in which we have had censuses of manufacturers, and we have the 
figures in thousands, total production workers in manufacturing on 
the left. Then for the machinery industries, the first two columns, 
total number of production workers in the machinery industries ana 
the percents. 

Those columns show year by year the total in manufacturing. The 
growth is summarized clearly in the percent figures, from 9.2 in 1899, 
rising pretty steadily, a dip in 1939, to be sure, to 16 percent in 1953. 
The electrical machinery in the next two columns parallels that, with 
a growth even greater, as I said before. This is my line. It used to 
be my line. One percent in 1899 to 6.3 percent in 1953. The other 
machinery has grown. Perhaps the most interesting point there is 
notes 1 and 2, indicating the wide range of types of other machinery 
that there are, including engines, turbines, tractors, farm machinery, 
machine tools, textile machinery, pumps and compressors, office 
machines, sewing machines, and so forth. 


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That is the machinery used in carrying on the work of the country, 
and attention is called to the wide variety used in activities outside 
of manufacturing. The chart on page 15 brings out graphically the 
same information as in the table, a general upward trend, irregular 
in spots, in the percent of production workers in all manufacturing 
industries who are engaged in all machinery industries, and in elec¬ 
trical machinery industries, as shown by the two curves. 

The Chairman. From the chart it appears that in the early thirties, 
the number of machines in use went down considerably. 

Mr. Burgess. That is the percent of production workers making 
machinery. 

The Chairman. That would reflect the expansion or lack of expan¬ 
sion on the part of the all industry, would it not? 

Mr. Burgess. Of the manufacturing industry. As an instance of 
the decline, I sent in the reports to the Census Bureau for 1931 and 
1933 for the Western Electric Co. As a matter of fact, I was not 
then in the Census Bureau, of course. I got a question as to the 
1933 report of the Hawthorne plant of that company: “Is this the 
same plant that you reported in 1931?” The differences were so 
enormous. A major activity in 1931 was the job of producing machine 
switching equipment for the telephone industry. Activity of the 
company as a whole fell off so far that employment dropped below 
18,000 in early 1933 ? whereas it had been up around 85,000 at the 
end of 1929. That is what happens in a depression. The number 
of people engaged in producing machinery- 

The Chairman. The swing was more violent than in other 
industries 

Mr. Burgess. More violent, I think, in all capital goods industries. 
That is generally recognized by people who analyze the business 
cycle. 


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(The following table was subsequently supplied to supplement this 
point:) 

Average number of production workers in metalworking machinery (industry 
group No. 854) » 1927-58 # and in machine tools (industry No. 8541) f 1919-58 



Machine tools (industry 

No. 3541) 

Number of 

Index of 

workers (In 

workers 

thousands) 

(1947-100) 

70.8 

140 

79.5 

145 

64. & 

117 

41.6 

70 

38.6 

70 

54.9 

100 

37.0 

07 

1 37.5 

68 

1 47.3 

86 

28.2 

51 

12.7 

23 

21.3 

39 

47.4 

80 

*32.4 

59 

*35.3 

64 

30,8 

50 

33.4 

61 

21.3 

39 

53.1 

97 


1 The smaller figure excludes data for establishments engaged primarily In manufacturing rod and wire 
forming and fabricating, rolling mill, sheet-metal-working, and wire drawing machinery and Is compa¬ 
rable with figures for later years. The larger figure Includes data for these establishments and Is compara¬ 
ble with figures for earlier years. 

* The smaller figure excludes data for establishments primarily engaged In manufacturing machine tool 
accessories and is comparable with figures for later years. The larger figure Includes data for these estab¬ 
lishments and Is comparable with figures for earlier years. 

Source: U. S. Bureau of the Census, Annual Surveys of Manufactures, 1949-53, and 1947 Census of Manu¬ 
factures, Vol. n. Data for years prior to 1939 compiled by Solomon Fabricant from the Census of Manu¬ 
factures and published In Employment In Manufacturing, 1899-1939 (National Bureau of Economic Re¬ 
search). 


The Chairman. Which year did you have 45,000 workers? 

Mr. Burgess. In 1921 or 1922. After World War I there was a 
big expansion. That is the time of the installation of the machine¬ 
switching equipment around New York City, and so forth. 

The Chairman. What was the number about 1930? 

Mr. Burgess. At the end of 1930, as I recall, it was around 63,000 
nr something like that. 

The Chairman. What was it, say, in 1933? 

Mr. Burgess. Under 18,000 in the first half of 1933. 

The Chairman. From 63,000 in 1930 to 18,000 in 1933 ? 

Mr. Burgess. That is my recollection. I notice you have some 
people from the telephone industry that are going to appear later. 
They will have their records right at hand. It was a tremendous 
decrease. At one plant location, Kearny, N. J., the number of all 
types of employees dropped from 22,000 to 3,000 or under 3,000. 

The Chairman. From 22,000, say, in 1930. to about 3,000 in 1933? 

Mr. Burgess. Yes. In January 1930 was tne peak. 

The Chairman. That was the high mark? 

Mr. Burgess. Yes, sir. 

The Chairman. What was the low point? 

Mr. Burgess. For this plant, I think 2,200, or something like that. 

The Chairman. I mean the low point in time. 


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Mr. Burgess. Well, the first few months of 1933, as I remember. 

The Chairman. How much did it cost the Bureau of the Census 
to install these Univac machines? 

Mr. Burgess. Well, the first one was something under a million 
dollars, as I recall. 

Mr. Hansen. In round numbers three-quarters of a million. 

Mr. Burgess. The cost went up after this original purchase. 

The Chairman. That was about 1951; was it not? 

Mr. Hansen. Yes, although the contract was made for the equip¬ 
ment somewhat before that. 

The Chairman. Was this on a leased basis or purchase basis? 

Mr. Burgess. That was a purchase basis. 

The Chairman. It was not from IBM? 

Mr. Burgess. No. This was another company. 

The Chairman. Does IBM furnish some of your machinery ? 

Mr. Burgess. Yes. We rent from IBM quite a lot of equipment 
regularly. 

The Chairman. Do you know of any reason why IBM leases, and 
you can purchase from the others? 

Mr. Burgess. That is the standard procedure. I don’t know; does 
anybody lease from Bemington Band? 

Mr. Hansen. Bemington Band will either rent or sell equipment. 

Mr. Burgess. IBM will not sell. 

Mr. Hansen. In general, that is true. 

The Chairman. What are the other companies that handle this 
kind of equipment, the big companies, besides IBM and General 
Electric? 

Mr. Burgess. Sperry Band. 

Mr. McPherson. BCA is supplying some equipment of this type. 
There is Electro Data Corp., the National Cash Begister people, and 
then there are maybe a hundred small companies. vTe could supply 
a list. I can’t recall the names. 

The Chairman. That is enough. 

Do they all lease or sell except IBM ? 

Mr. McPherson. I don’t think I know. 

The Chairman. IBM is the only one that you know that exclusively 
deals with the leasing ? 

Mr. McPherson. I know that IBM has that policy. Whether BCA 
and National Cash Begister and others will adopt the policy, I don’t 
know. 

The Chairman. What does it cost to operate these machines, say, 
for an hour, per day; that is, these large computers ? 

Mr. Hansen. We operate them, these two machines combined, for 
about $35 an hour. 

The Chairman. $35 an hour ? 

Mr. Hansen. I am sorry. This is the cost per machine. 

The Chairman. That is the cost per machine. That doesn’t include 
the pay for the people who operate them or anything like that? 

Mr. Hansen. This does include the pay for the people. The total 
cost of operating, including the management staff for the operation 
itself, and the maintenance of the equipment. It does not include the 
capital cost, any charge for capital cost of the equipment or for space or 
power. 


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The Chairman. You have machines that are put out, I assume, 
by Remington Rand and by IBM that compare pretty well. Are they 
about the same type of machine ? They do about the same thing ? 

Mr. Burgess. You say “we have.” We don’t happen to have any 
IBM electronic, large-scale computer. 

The Chairman. How would these lease arrangements compare in 
cost to purchase arrangements ? In other words, what kind of a pay¬ 
out would you have on lease arrangement ? 

Mr. Burgess. We had our original contract for the second Univac, 
set up on a lease-purchase arrangement, and it became clear when we 
were able to get the funds in connection with these large economic 
censuses that it was definitely more economical to purchase than to 
lease. 

The Chairman. To purchase than to lease ? 

Mr. Burgess. Yes. 

Mr. Hansen. If I might add a point there, Dr. Burgess, we operate 
our machines 24 hours a day, 7 days a week, both of them, and when 
you operate on this very full scale, the advantage of purchase over 
rent is particularly great, and in this case, we figured that in a period 
of 3 to 4 years, if one' purchased, he would—well, if one took the 
rentals and put them into purchase, it would take a period of 3 to 4 
years of rentals to convert to a purchase; that is if you applied them 
to purchase in the first place. 

The Chairman. How long are they good for, 15 or 20 years ? 

Mr. Hansen. Well, except for obsolescence—they are good indefi¬ 
nitely. The maintenance policy is such as to continue them in opera¬ 
tion indefinitely. The only time one would take them out of service 
is when new equipment comes to the point where it pays to substitute 
new equipment for the old. 

The Chairman. If you were to make an estimate of the additional 
cost of leasing, as compared to buying, what would you say the addi¬ 
tional cost would be ? 

Mr. Hansen. I don’t know how to answer that question, except 
perhaps in the terms I already did: by buying, say, after 3 or 4 years, 
we effectively get the equipment rent free. Rentals Cost, depending on 
how much you operate and what particular pieces of auxiliary equip¬ 
ment you are using with the main computer, and if you are operating 
24 hours a day, 7 days a week, rentals on equipment such as we have 
for 1 machine, with accompanying auxiliary equipment, will run 
around, as I remember it, around $400,000 a year. 

Mr. McPherson. I was going to say $380,000. 

Mr. Hansen. $412,000 is the number I remember, but I am not 
sure. 

Mr. Burgess. May I suggest, Mr. Chairman, that at this point 
perhaps we could file something for the record ? 

The Chairman. I wish you would, Mr. Burgess. That would be 
very interesting. 

Mr. Burgess. We need to cover these different alternatives, the 
various rates of activity. 

(The information is as follows:) 

The following information comparing rental with purchase is based on our 
rental-purchase contract with Remington Rand, dated September 9, 1954, for 


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a Univac with six Uniservos and onr experience in maintaining our first com¬ 
puter. 


Alternative rental plans: 

Ann ual rental for Univac with 6 Uniservos: 

(а) for operation 1 shift a day 5 days a week_$205,260 

(б) for operation 3 shifts a day 7 days a week- 411,900 

Purchase plan: 

Price of Univac with 6 Uniservos_ 783,000 

Annual cost of maintenance when purchase plan based on our 
experience: 

(а) for operation 1 shift a day 5 days a week_ 60,000 

(б) for operation 3 shifts a day 7 days a week_ 90,000 


Under either plan installation was an additional $89,440. No printer, card-to- 
tape, or other auxiliary equipment was included in this contract 

As anticipated, we have operated our 2 computers 3 shifts per day 7 days per 
week since they were installed and expect to continue operating on this basis. 

The Chairman. Answer the question as well as you can, please. 

Mr. Burgess. Yes. 

The Chairman. Mr. Burgess, I want to ask you, do you have at 
your fingertips the farm population as it has increased in the last few 
years? 

Mr. Burgess. I don’t think I recall precisely. We have a report on 
that, and it has decreased in the last 5 years between 1950 and 1955 
census. I think it is something in the order of 5 million decrease. 

The Chairman. Perhaps I should write you a letter on that, Mr. 
Burgess. 

Mr. Burgess. We can give you the figure on that. 

(The information is as follows:) 

Estimated farm population in the United States , 1910-35 


Year (April) 

Millions of 
persons 

Percent of 
total popula¬ 
tion 

Year (April) 

Millions of 
persons 

Percent of 
total popula¬ 
tion 

iqjut , _ 

22.2 

13.5 

1230_ 


24.9 

1950., - - 

25.1 

16.6 

1925. 

—ail 

27.0 

1945 _ _ _ 

25.8 

18.1 

1020_ 


80.1 

_ 

30.5 

23.2 

1013_ 

mmmm 

32.4 

1933. _ 

32.2 

25.3 

1910. 

32.1 

34.9 








Source: Estimates prepared jointly by the Bureau of the Census and the Agricultural Marketing Service 
and published in Series Census-BAE, No. 16 and Census-AMS, No. 21. 


The Chairman. I am interested in the farm population and I have 
some other questions which you can supply the information if you 
please. 

Mr. Hansen. May I make one more remark on the comparison of 
rental and purchase? I think your point that we should supply this 
information later is well taken, but I would like to make a comment 
amending what we said before about rental versus purchase. If it 
costs about $400,000 a year to rent, and something approaching $100,000 
a year that we have to pay to maintain our own equipment, that should 
be subtracted from that, so that one would think of something of the 
order of $300,000 a year after you have paid for it. 

The Chairman. After about the third or fourth year you would be 
saving about $300,000 a year. You would have to deduct from that 
the replacement of parts. 

Mr. Hansen. This hundred thousand I mentioned takes care of 
replacement of parts. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 89 

The Chairman. You would save some $300,000 a year after a few 
years? 

Mr. Hansen. If you operate 24 hours a day, 7 days a week. We 
will supply the information, but I didn’t want to leave that wrong 
impression. 

The Chairman. Mr. Moore, do you have some questions? 

Mr. Moore. Mr. Burgess, would it be possible to explain so that a 
layman could understand the great technological break, the great tech¬ 
nological difference between the familiar old-fashioned punchcard 
setup and this new computing machine? Is one of the mechanical 
or semimechanical or are they both more or less dependent upon elec¬ 
trical contacts? 

Mr. Burgess. They are radically different bases. Perhaps Mr. 
Hansen can give you that. 

Mr. Hansen. Probably Mr. McPherson can give most briefly and 
effectively the difference. 

Mr. McPherson. I think there’s maybe two parts: One, the bril¬ 
liant realization that a vacuum tube could compute by just being either 
on or off ; and secondly, the newer equipments contain their control 
elements internally ana operate on the instructions, the same as they 
operate on data, so that consequently, for any item of information that 
one of these new devices wants to look at, and process, it is permitted 
to keep that item of information in effect in front of it, so it can be 
looking at it. 

The old punchcard equipment was all geared to a fixed cycle. The 
card came into place, it staved there for a fixed period of time. It 
never varied. It didn’t make any difference whether you wanted to 
do a lot or a little. You only had so much time. The new equipment 
lets you devote as much time to any piece of information as you chose 
to. Therefore, you can have long, complex operations for one item 
of information, something very simple for the next, and the machine 
takes a long time on the one, a short time on the other. 

I don’t know whether that is simple or not.' 

Mr. Moore. But the introduction of the punchcard some years ago 
was itself a revolutionary thing in office work. 

Mr. McPherson. Indeed, yes. We are very proud that that was 
invented at our Bureau. 

Mr. Moore. Then this introduction of electronic computers is sort 
of the second revolution which data processing has gone through in 
a lifetime. 

Mr. McPherson. Except that I agree with the Director, it is more 
evolution. I don’t really think it was revolution when the punch- 
card came in, although I wasn’t at the Bureau. The device has been 
improved in the last half century, and as Dr. Burgess said, we use 
more people rather than less, probably because we get out more data 
rather than less. 

We get it out much more efficiently than we did before. 

Mr. Moore. I notice, Mr. Burgess, that you referred to the fact 
that in the early introduction of these new computers, no one then 
had any real experience with them, and so you didn’t get the utmost 
out of them. You then point out that as your own experience in¬ 
creased. you were able to get additional information from them. To 
what extent was the new knowledge, experience, and development 


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dependent upon the users like yourselves as opposed to that supplied 
by the manufacturers? 

In other words, did you in the Census learn because your own tech¬ 
nicians learned new uses for these machines, or to what extent were 
these pointed out to you? 

Mr. Burgess. It became both. I came with the Census Bureau in 
February of 1953. Mr. Hansen can answer that more fully, to show 
the development of it. 

Mr. Hansen. I am sure the manufacturers have been of tremendous 
assistance in pointing out both ways of using this equipment, but I 
think the answer to your question is essentially that we have had to 
ourselves develop the types of applications and how to apply equip¬ 
ment to these applications. 

Mr. Moose. So that the Government, through the Census, has made 
a genuine contribution to the advancement of this science or tech¬ 
nology? 

Mr. Hansen. Census and others working with the equipment. 

Mr. Moore. You don’t have to be modest about it. 

Mr. Hansen. I think Census as well as the manufacturers and 
others. 

Mr. Moore. Of course, not only Census, but other Government de¬ 
partments that have used and helped develop these machines. 

Mr. Hansen. Yes, sir. Bureau of Standards certainly has had a 
leading role in this. 

Mr. Moore. One other question: Is there any difference in what 
you might call the “mix” of personnel, that is the relative number 
of supervisors, foremen, and chief clerks, clerks, and so forth, after 
you have installed one of these machines, than you would have had 
before? In other words, in an old office setup there were junior clerks, 
clerks, chief clerks, strawbosses, and others. Is the proportion or 
experts any greater relatively in an automated setup or is it about the 
same mix? 

Mr. Burgess. My view of it is that the proportion of experts and 
the degree of expertness has been raised very substantially in this 
and other developments. 

Mr. Hansen. I think that is right. 

Mr. Moore. I wondered, Mr. Chairman, if Dr. Burgess could submit 
ft summary table of some kind for us here in reference to the state¬ 
ment that increased employment has appeared in some parts of the 
economy at the same time that others have been decreasing as the 
result of use of automatic equipment. 

Professor Buckingham yesterday cited a study which he said showed 
that in 12 cases of automation, ranging from chocolate refining to 
railroad traffic control, the reduction of employee requirements aver¬ 
aged 63.4 percent. I imagine there might be other industries that 
have expanded as a consequence of the increased use of automatic 
equipment. If you have such tables, can you furnish those? 

Mr. Burgess. We will review what we can find from our infor¬ 
mation. 

(The following was subsequently supplied for the record:) 

The following four tables present rankings of industries according to percent 
change In employment from 1940 to 1950. The first table lists the major indus¬ 
try groups. This is followed by three tables which rank the individual indus¬ 
tries within the sectors of (1) durable-goods manufacturing, (2) non-durable 
goods manufacturing, and (3) transportation. The four tables show the rela- 


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91 


tive growth in total employment in the respective industries. These data do 
not provide a measure of the extent or growth of automation in each industry. 
The Census Bureau does not have any statistical information from which such 
a measurement can be obtained. The table, however, will permit rough judg¬ 
ments to be made on the relation between automation and employment, on the 
basis of independent knowledge as to the extent to which automation has been 
applied in particular industries. For example, telecommunications, which has 
been among the pioneers in the use of automatic equipment and has greatly 
expanded its use since 1940, showed one of the largest percentage gains in em¬ 
ployment over the 1940-50 decade. Presumably the reduction in cost of the 
services made possible by automation was a factor in the increased demand 
for the services. 


Ranking of major industry groups by 1940-50 percent change in employment 


Major industry group 

Public administration_ 

Telecommunications_ 

Construction_ 

Wholesale trade___ 

Business and repair services_ 

Manufacturing, durable goods__ 

Professional and related services_ 

Utilities and sanitary services_ 

Retail trade_ 

Transportation___ 

Entertainment and recreation services___ 

Finance, insurance, and real estate_ 

Manufacturing, nondurable goods_ 

Total employed_ 

Forestry and fisheries_-_ 

Personal services, except private households-- 

Mining____ 

Agriculture_ 

Private households_ 

Source: U. S. Census of Population, 1950, vol. II, pt. 1, table 56. 


Percent 

change, 

1940-50 


77.0 

75.0 

65.8 

64.0 

58.4 
51.6 

42.1 

41.4 

85.2 

34.5 

32.1 

30.1 

27.1 

25.3 

14.6 
12.5 

1.7 

-18.0 

-29.7 


Ranking of durable goods manufacturing industries by 1940-50 percent change 

in employment 


Percent 

change, 

Industry 1940-50 

Aircraft and parts—_140.0 

Electrical machinery, equipment, and supplies_- 112.9 

Agricultural machinery and tractors___101. 5 

Professional and photographic equipment and supplies--- 78.3 

Miscellaneous machinery_ 77.0 

Office and store machines and devices_ 66.4 


Cement, and concrete, gypsum, and plaster products_ 60.1 

Clocks and miscellaneous manufacturing industries--- 58.5 

Nonferrous-metal industries_1___ 54.1 

Motor vehicles and motor-vehicle equipment_— 52.1 

Total, durable-goods manufacturing_- 51.6 

Pottery and related products---_ 44.2 

Iron and steel industries, except steelworks- 44.0 

Railroad and miscellaneous transportation equipment_ 43.3 

Furniture and fixtures___ 42.7 

Glass and glass products---- 36.8 

Sawmills, planing mills, and millwork__ 34.4 

Miscellaneous nonmetallic mineral and stone products__ 26.9 

Total, employed—___—_ 25.3 

Logging-:_ 21.5 

Blast furnaces, steelworks, and rolling mills_ 21.3 

Structural clay products—____ 15.1 

Miscellaneous wood products_ 9.0 

Ship and boatbuilding and repairing_ 2.6 


Source: U. S. Census of Population, 1950; vol. II, pt. 1, table 131. 


45006 0—09-7 | 


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Banking of nondurable goods manufacturing industries by 1940-50, percent change 

in employment 

Percent 

change. 

Industry 1940-50 

Miscellaneous paper and pulp products__ 121.3 

Drugs and miscellaneous chemicals__ 65.2 

Paperboard containers and boxes- 62.2 

Canning and preserving fruits, vegetables, and sea food- 60.7 

Rubber products_ 49.8 

Miscellaneous^abricated textile products_ 47.1 

Petroleum refining-_'- 45.5 

Dairy products___ 39.7 

Miscellaneous food industries_ 37.9 

Printing, publishing, and allied industries_ 35.0 

Apparel and accessories_ 34.7 

Paint, varnishes, and related products_ 32.5 

Meat products_ 30.3 

Grain-mill products_ 29.5 

Notal, nondurable goods manufacturing_ 27.2 

Total, employed_ 25.3 

Carpets, rugs, and other floor coverings_ 24.8 

Beverage industries_ 23.3 

Leather products, except footwear_ 17.7 

Dyeing and finishing textiles, except knit goods_ 14.7 

Bakery products_ 13.0 

Pulp, paper, and paperboard mills___ 12.0 

Miscellaneous petroleum and coal products- 11.8 

Yarn, thread, and fabric mills—- 9.9 

Confectionery and related products__ 9.7 

Footwear, except rubber_ 8.7 

Synthetic fibers- 4.5 

Miscellaneous textile mill products--_ —4.4 

Leather: tanned, curried, and finished_ —4.8 

Knitting mills___—10.7 

Tobacco manufactures___—13.8 

Source: U. S. Census of Population, 1950, voL II, pt. 1, table 181. 

Ranking of transportation industries by 1940-50, percent change in employment 

Percent 

change. 

Industry 1940-50 

Air transportation_ 323.9 

Taxicab service___:_ 95.2 

Warehousing and storage_ 76.7 

Street railways and bus lines_ 45.5 

Services incidental to transportation_ 44.9 

Trucking service_ 36.7 

Total, transportation--- 34.5 

Total, employed- 25.3 

Railroads and railway express service___- 22.2 

Water transportation_ 15.6 

Petroleum and gasoline pipelines- 12.6 

Source: U. S. Census of Population, 1950, vol. II, pt. 1, table 181. 

The Chairman. Mr. Ensley. 

Mr. Ensley. Mr. Burgess, will you give us a little more information 
on the method of retraining and the experience you have had at 
Census 1 

Mr. Burgess. I will refer to my colleagues on the steps on that. 
Do you want to take it, Mr. Hansen ¥ 

Mr. Hansen. I might make a remark on it and ask Mr. McPherson 
to remark on it. I might say Mr. McPherson was the person who had 


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the lead role in connection with getting the staff trained that the 
Census applied to this computer when we first acquired it. I did want 
to emphasize the point that you made in the paper, Dr. Burgess, that 
we have something of the order of perhaps 50 people working on this 
computer, with differing degrees of specialized training, most of them 
rather highly specialized training, and yet I think it is fair to say 
that perhaps only 1 of these came from the outside in the sense that 
he came trained on the computer as an expert before he came to us. 
We were able to train people, and some of them in advance of the 
actual acquisition of the computer, prior to the time that we put it in 
operation and during the time we have had it in operation, so that we 
have drawn from our own staff, or people comparable to people on 
our staff. There has been turnover and outside recruiting. Ithink 
the different techniques of training have differed a great deal, whether 
it is operators, programers, or engineers. 

Would you like to comment more specifically on the training, Mac! 

Mr. McPherson. I think you have covered all of it, perhaps, except 
this training of programers. I sometimes describe our use of this 
equipment as being a little like a laundromat, in the sense that we 
keep the equipment in operation, and the subject matter people in our 
Bureau, the people responsible for the Current Population Survey, in 
our Population Division, for the Current Business Survey in our 
Business Division, and so on through the other subject matter special¬ 
ties, bring their work to it. They assume much of the responsibility 
for programing. They come and bring their work to the machine. It 
only takes a matter of a few minutes to stop one kind of work and start 
another. 

The training of the people that have done much of this programing 
has been successful, and very short—a matter of only a few months, 
as the Director says. The important ingredient to success is not 
learning how to program for the equipment, but knowing and under¬ 
standing the problem. 

These people will maybe have spent years becoming specialists in 
employment and unemployment statistics, and only a matter of a few 
months to become familiar with the computer itself. The important 
ingredient is understanding of the problem, and learning the computer 
is almost self-training for many or our intelligent people 

Mr. Hansen. If I can add a remark to that to supplement the 
training in another respect. I think that our experience, since we 
were the first in this field with the Univac, the computer, may be 
perhaps different than that of those who more currently acquire 
the equipment. Most of our training was on-the-job training, with 
only a few people, a comparatively small proportion spending periods 
of a month or two in formal training classes, supplied by the manu¬ 
facturer. A few of our people have had this sort of training. Most 
of them have learned on the job, without that formal sort of train¬ 
ing, but more or less formal training and on-the-job work, right with 
us. 

Mr. Enslet. Your agency has been, more or less, the pioneer. We 
read in the paper last night of the Treasury introducing new equip¬ 
ment for processing checks. Is there any need, or perhaps there 
is in existence a central retraining program that the Civil Service 


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Commission has created? Would there be any need for that, or can 
it be completely decentralized and performed by the agency involved? 

Mr. Hansen. Some of the colleges in the area are giving training 
in some aspects of computers, and in other parts of the country. 

Mr. Ensley. I am thinking of the fellow who has been writing 
it by hand, and his job has heen taken over by machine and you 
have the problem of retraining that person to either work that 
machine or do some other job. 

Mr. Hansen. I would prefer to turn to Mr. McPherson, again. 
My opinion is Civil Service would not do too much for that person 
when it comes to installation of equipment. 

Mr. McPherson. I would feel pretty much the way Mr. Davis and 
his colleagues felt yesterday, that the operation is pretty easy, to 
change the operator from one machine to another. The specialized 
training, that which takes longer, will be in the maintenance and 
engineering side. This, obviously, will be specialized to particular 

S ieces of equipment so I would doubt that tne Civil Service would 
o this. 

There is, in my opinion, in this area of processing, a possibility 
that in this Treasury application, for example, where they have a 
continuing workload—at Census we have these peaks and valleys, so 
that it is how many people we employ for a big job, not where do 
we find work for displaced people, but in this Treasury application 
they may find that they need fewer operators. 

There might be some desirability for programs of some sort de¬ 
signed to equip those displaced people to do other jobs, whether or 
not those other jobs would be in the same agency. 

Mr. Ensley. Is the Civil Sedvice Commission taking note of these 
technological developments? 

Mr. McPherson. I have a feeling they can’t help themselves, be¬ 
cause we are their customers, in a sense, and one of our problems 
is getting the people that we have working on this equipment classi¬ 
fied at the levels that we think they should be classified, so certainly 
some people at the Civil Service Commission are aware of that. 

Mr. Burgess. May I put in a comment there, because even though 
this involves admitting that we do have discussions and “hassles” in 
the Census Bureau, this matter of recruiting people for our growing 
requirements, the second Univac, led to some divergence of view be¬ 
tween Mr. Hansen’s organization and our personnel people who have 
to deal with the Civil Service. 


Hansen said we wanted some good people, and they admittedly 
have difficulty at this stage in writing out specifications that fit into 
the ordinary Civil Service mold, and the Civil Service people have 
grades written out with levels of pay, which seem to us hard to mold, 
to take account of the new requirements that are coming along, and 
perhaps it can be recognized they are difficult to put down to print. 
Therefore, to get back to the point I commented on as we went along, 
these requirements are for able people, for example, people who are 
trained in mathematics. A9 indicated in my earlier experience, in 
the first 10 years out of graduate school I was teaching mathematics, 
largely to freshmen engineers, at different institutions, and I know 
the difference in capacity of the different students that come along, 
or different people that come along, and it is very conspicuous, espe¬ 
cially in the mathematical line. 


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I think from what I observed here it sticks out when you get on the 
various levels of work, in using electronic computers, and I think 
actually it is applied also in using IBM equipment. Those people 
are sifted out. It isn’t merely a matter of training or organization 
procedure. It is a matter of recognizing the inherently different 
capacities of different individuals and getting the right people for 
the jobs. 

Mr. Hansen. If I can add to that point just briefly, you were rais¬ 
ing the question about training earlier. A part of our problem, 
especially earlier while getting our equipment going, arose out of 
the fact that the people we got and trained were lost to industry. 
We spent quite a little time training some of them before we got the 
machine, and this training turned out not to do the Government any 
good. We were unable, because of the Civil Service system and the 
rules and regulations we were working under, to keep these people. 

We trained and supplied them to industry, in effect, without getting 
any benefit from them. This is still what was happening a little more 
recently in connection with what the Director referred to. We had 
some serious problems keeping personnel. We are beginning to see 
some solutions, some of them bv using other channels than getting 
around Civil Service. I think this is still a real problem still with us. 

Mr. McPherson. There is still great competition for these skills, 
and when private industries buy one of these devices, it is pretty 
easy to go to the Government to find a readymade, trained employee. 

Mr. Ensjley. I have one more question, Mr. Burgess. 

Countries have differing types of organization for gathering and 
disseminating statistics. In many countries statistics are garnered 
by one central office. In this country the function is decentralized 
and performed by the operating agencies. Your agency is one of 
these gathering agencies. Are there any implications of this new 
electronic equipment which suggest whether a central office is more 
efficient? Would there be any economy, so to speak, because of the 
automatic equipment, to having a central statistical office? 

Mr. Burgess. I think in the compilation end in this country, and in 
others, it ought to be planned to have large enough units to take ad¬ 
vantage of this. That is, the unit which we have, or the two Univacs— 
two of these large computers working together, we believe, is a more 
efficient setup and more efficient system than having one working part 
time in one place and another working elsewhere. That doesn’t mean 
that in the United States Government necessarily they all have to be 
in one unit, but in big enough units, so as to get the efficiency of the 
full-time use of the big items. 

Mr. Hansen. If I could make a comment, related to that point: We 
have indicated we have two Univacs, which we do have, but actually 
we bought one and three-quarters computers. The Internal Revenue 
Service bought one-fourth of our second computer. They were plan¬ 
ning initially to proceed to rent a computer at the same time we were 
exploring the possibilities of getting a second computer. We got 
together with them and found by joint operation we could make very 
real gains for us as well as economies for them, as compared with 
renting their equipment. It was their joining in and buying a fourth 
of our second computer that made it possible, with the resources we 
had within the framework of these censuses to actually buy our com- 


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puter to do the censuses, and both of us have achieved very substantial 
gains. I think it is working most satisfactorily from the point of view 
of both agencies. 

Mr. Enslet. So that you can, on a decentralized basis, through 
interagency transfers and cooperation, accomplish the economies that 
you would ordinarily expect in this type of development, without 
centralizing everything in one. 

Mr. Hansen. I think we can. 

Mr. Burgess. It doesn’t need to be centralized at the top. This part 
of the operating end needs to be brought together. 

Mr. McPherson. Mr. Hansen said that we spent about $35 per hour 
per Univac. We had only one Univac for a period of almost 4 years, 
and as I recall, when we were operating only one, our costs were about 
$45 an hour. 

Mr. Hansen. That is about right. There are real economies in the 
combined operation of the computers. 

Mr. Enslet. Thank you. 

The Chairman. Thank you gentlemen very much. You have been 
very helpful. We appreciate it. 

Without objection, we will stand in recess until Monday morning. 

Mr. Burgess. Mr. Chairman, the suggestion is if the chairman or 
members of the committee or Mr. Moore, Mr. Ensley, and other staff 
members would like to come out and see our Univacs, we would be 
glad to have you. 

The Chairman. We have in mind asking you to give us the time 
when we can visit your place. We will do that later. Thank you. 

(Whereupon, at 11:15 a. m., the committee recessed, to reconvene 
at 10 a. m., Monday, October IT, 1955.) 


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MONDAY, OCTOBEB 17, 1055 

Congress of the United States, 

Subcommittee on Economic Stabilization of the 

Joint Committee on the Economic Report, 

Washington, D. 0. 

The subcommittee met at 10 a. m., Hon. Wright Patman (chairman) 
presiding. 

Present: Representative Wright Patman, chairman of the sub¬ 
committee. (presiding). 

Also present: William H. Moore, staff economist, and Grover W. 
Ensley, staff director. 

The Chairman. The subcommittee will please come to order. 

This morning we are privileged to hear Mr. Walter Reuther, who is 
head of the United Auto Workers, and since 1952 president of the 
Congress of Industrial Organizations. 

Mr. Reuther, we are glad to have you this morning, and we always 
profit from your testimony. We are always glad to hear from you. 
So you may proceed in your own way, if you wish. 

STATEMENT OF WALTER ?. REUTHER, PRESIDENT, CONGRESS OF 

INDUSTRIAL ORGANIZATIONS; ACCOMPANIED BY DON MONT¬ 
GOMERY, DIRECTOR, WASHINGTON OFFICE, UNITED AUTOMO¬ 
BILE WORKERS OF AMERICA; AND NAT GOLDFINGER, ASSOCIATE 

DIRECTOR OF RESEARCH, CIO, WASHINGTON, D. C. 

Mr. Reuther. Thank you, Mr. Chairman. 

First, I should like to express my appreciation for the opportunity 
of appearing here, and I would like to congratulate your subcommittee 
for conducting these very extensive studies of this developing problem 
of automation. 

Mr. Chairman, I have a prepared statement which I should like to 
enter into the record, and I would like to elaborate on it orally. 

The Chairman. It will be inserted. 

(The statement is as follows:) 

I should like first of all to express my thanks to this subcommittee for the 
opportunity to testify on automation and to congratulate its members for call¬ 
ing these hearings. 

One of the essentials of a strong and effective democracy is that we have 
leaders who attempt to anticipate situations which may arise and prepare in 
advance to deal with them. Too often in the past, nations have been surprised 
unnecessarily by economic and social dislocations. In the 18th and 19th 
centuries, for example, the first Industrial revolution brought untold hard¬ 
ships to millions of families in Great Britain, partly because Britain at that 

97 


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time lacked both the economic knowledge to understand and control the forces 
at work and the democratic institutions of government through which the people 
could have called attention to their needs. In our own country, had we under¬ 
stood the economic forces that were eating away at the base of our apparent 
prosperity in the 1920’s we surely would have been able to build safeguards into 
our economy that could have protected us from the collapse that followed. 

In the spread of automation and the prospective large-scale industrial use of 
atomic energy—and the possible practical utilization of solar energy, as well— 
we are faced with mighty forces whose impact on our economy can be vastly 
beneficial or vastly harmful, depending on whether we succeed or fail in achieving 
economic and social progress that will keep pace with changing technology. 

The willingness of this subcommittee to study these technological develop¬ 
ments, and to look squarely at the potential problems they may create, gives hope 
that this time we will not be caught unaware. It gives us hope, too, that we may 
be able to foresee the threat of dislocations and take action in advance to enable 
us to enjoy the benefits of a new abundance, without first having to pay a heavy 
price in unemployment and human suffering. 

AUTOMATION—A REVOLUTION ARY DEVELOPMENT 

We have been told so often that automation is going to bring on the second 
industrial revolution that there is, perhaps, a danger we may dismiss the warn¬ 
ing as a catch-phrase, and lose sight of the fact that, not only the technique, but 
the philosophy of automation is revolutionary, in the truest sense of the word. 
Automation does not only produce changes in the methods of manufacturing, dis¬ 
tribution, many clerical operations, and in the structure of business organiza¬ 
tion, but the impact of those changes on our economy and our whole society 
bids fair to prove quite as revolutionary as were those of the first industrial 
revolution. 

Through the application of mechanical power to machinery, and the develop¬ 
ment of new machinery to use this power, the first industrial revolution made 
possible a vast increase in the volume of goods produced for each man-hour of 
work. Succeeding technological improvements—such as the development of inter¬ 
changeable parts and the creation of the assembly line which were essential to 
the growth of mass production industries—have led to continuous increases in 
labor productivity. But however much these machines were improved, they still 
required workers to operate and control them. In some operations, the worker’s 
function was little more than to feed the material in, set the machine in opera¬ 
tion and remove the finished product. In others, proper control of the machine 
required the exercise of the highest conceivable skills. But whether the required 
skill was little or great, the presence of a human being, using human judgment, 
was essential to the operation of the machine. 

The revolutionary change produced by automation is its tendency to displace 
the worker entirely from the direct operation of the machine, through the use of 
automatic control devices. No one, as far as I know, has yet produced a fully 
satisfactory definition of automation, but I think John Diebold came close to 
expressing its essential quality when he described automation as “the integration 
of machines with each other into fully automatic, and, in some cases, self-regu¬ 
lating systems.” 

In other words, automation is a technique by which whole batteries of 
machines, in some cases almost whole factories and offices, can be operated 
according to predetermined automatic controls. The raw material is auto¬ 
matically fed in, the machine automatically processes it, the product is auto¬ 
matically taken away, often to be fed automatically into still another machine 
that carries it automatically through a further process. In some cases the 
machine is self-regulating—that is, it is set to turn out a product within certain 
tolerances as to size or other factors, and if those tolerances are exceeded, the 
machine itself detects the variation and automatically adjusts itself to correct it. 

The revolutionary implications of this new technology can best be under¬ 
stood by looking at a few examples of what is actually being done through auto¬ 
mation today, in scattered parts of the economy. 

THE LATHE THAT REPLACES ITS OWN TOOLS 

The application of automation ranges all the way from individual automatic 
machines to virtually automatic factories. 


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An example of the first is an automatic lathe, produced by the Sundstrand 
Machine Tool Co., described in American Machinist, March 14, 1955, page 117, 
which gages each part as it is produced and automatically resets the cutting tools 
to compensate for tool wear. In addition, when the cutting tools have been 
worn down to a certain predetermined limit, the machine automatically replaces 
them with sharp tools. The parts are automatically loaded onto the machine 
and are automatically unloaded as they are finished. These lathes can be 
operated for 5 to 8 hours without attention, except for an occasional check to 
make sure that parts are being delivered to the loading mechanism. 

AN AUTOMATIC PLANT 

A completely automatic plant is now producing mixed and ready-to-use con¬ 
crete for the Cleveland Builders Supply Co. (Business Week, Apr. 16,1955, p. 80). 
Operated from an electronic control panel, the plant can produce and load into 
ready-mix trucks any one of some 1,500 different mixing formulas that may be 
demanded. This plant uses no manual labor at any point in the process. 

By a combination of teletype and radio, the control operator is informed as 
to the particular formula to be loaded into each truck as it arrives. He gets 
out a punched card, coded for that formula, and the automatic mechanisms take 
over. Specified amounts of the required materials are delivered by conveyors, 
in precisely the right quantities, to a mixing bin where they are automatically 
mixed and then loaded into the waiting truck. The control mechanisms even 
measure and compensate for any deficiency or excess of water in the aggregate 
(sand, coarse rock, slag, etc.) which goes into the mixer, and if the order calls 
for a dry mix, the materials are automatically routed through a dry spout. 

This automatic plant has a capacity of 200 cubic yards of concrete per hour, 
as against 100 cubic yards per hour in the company's conventional plants. 

THE AUTOMATIC BROACHING MACHINE CUTS DIRECT LABOR COSTS DRASTICALLY 

An automatic two-way horizontal broaching machine for machining auto¬ 
mobile cylinder heads has cut direct labor costs between 1949 and 1954 by more 
than all the technological improvements made in this process during the previous 
35 years—and with an actual decline in the investment required (Instruments 
& Automation, January 1955, p. 111). 

In 1914 the Cincinnati Milling Machine Co. would have used 162 machines, 
representing an investment of $243,000, to machine 108 cylinder heads per hour 
at a direct labor cost of 40 cents per piece. By 1949 it took six machines, repre¬ 
senting an investment of $240,000, to turn out the same volume of production at 
a direct labor cost of 20 cents per piece. (The saving in man-hour requirements 
is much greater than indicated by these figures, when the increase in wage rates 
between 1914 and 1949 is taken into account.) 

By 1954, however, those six machines had been replaced by a single automatic 
machine, representing an investment of only $230,000, for the same volume of 
production, and direct labor costs had been cut from 20 cents a piece in 1949 to 
4 cents a piece in 1954—a reduction of 80 percent in 5 years. 

MERELY CHANGE THE TAPE TO CHANGE THE JOB BUN 

One of the important features of automation is that it can be applied not only 
to long rims of identical operations, but to fairly short-run jobs where instruc¬ 
tions given to the machines have to be changed at the end of each job. This 
is made possible through the use of printed tape, punch cards, etc., on which 
the instructions are coded, and the machine is given a new set of instructions 
simply by changing the tape or card. 

Minneapolis-Honeywell Regulator Co., for example, reports (Wall Street 
Journal, April 22, 1955) the development of a precision boring machine, used in 
aircraft equipment production, which can bore holes with an accuracy of one- 
thousandth of an inch. Electronic signals from a tape move the blank metal 
back or forward, rotate it into position, and then turn on the boring mechanism 
to cut the hole exactly where it is desired. The machine is specially suited for 
medium-size production in lots of several hundred parts. 


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RUNNING A BANK WITH AN ELECTRONIC COMPUTER 

The use of automation is not restricted to manufacturing plants. Increasingly, 
so-called electronic brains are taking over the functions of office clerks, ac¬ 
countants, and other white-collar workers. 

Stanford Research Institute has produced for the Bank of America (Fortune, 
October 1955, p. 131) an electronic computer which will do the jobs of many em¬ 
ployees. When a check comes to the bank, an operator merely punches into 
the machine the amount on the face of the check. The check itself carries a 
code, printed in magnetic ink, which identifies the account number. The ma¬ 
chine scans this code to identify the account. It then refers to its “memory 
bank,” which contains information on 32,000 separate accounts, makes sure there 
is enough in the account to meet the check (if there is not a warning “over¬ 
draft” light is blinked at the operator’s desk), and deducts the amount of the 
withdrawal from the account. The machine also checks up to make sure that 
there is no stop-payment order against the account. The whole operation 
takea approximately 1 second. 

The transaction is recorded, first in a “temporary memory” bank, and is trans¬ 
ferred later to a “permanent memory” bank. At the end of the month, the 
computer automatically calculates the service charge and then, connected to a 
high-speed printer which can print 800 characters a second, it prints the cus¬ 
tomer’s complete monthly statement in less than 5 seconds. It is claimed that 
9 operators and 1 such machine can replace up to 50 bookkeepers. 

Similar computers are being used to make up payrolls, to prepare insurance 
premium notices and record payments, to prepare telephone bills, to take inven¬ 
tory, to control the operation of electric power generating plants, and for many 
similar purposes. One centrol computer to be installed by the Ohio Edison Co., 
for example, will simultaneously control the operations of 35 generators in 9 
plants scattered over an area of 9,000 square miles (New York Times, August 
18, 1955). 

Even automation itself is being automated. One of the bottlenecks in the 
use of computers to which data is punched cards has been the time required to 
have the information punched on the cards by trained operators. Now the 
Burroughs Corp. has produced for the First National City Bank of New York 
(Wall Street Journal, June 17, 1955) an electronic device which “reads” the 
serial numbers on travelers’ checks and reproduces them on punched cards at a 
rate of 7,200 checks per hour, doing the work of 10 highly skilled operators. 

The great variety of applications shown in these few examples illustrates one 
of the most significant features of the new technology—its wide applicability. 
That is the real quality that makes automation a genuinely revolutionary force 
in our economy, rather than just another technological improvement. 

It is technically possible to apply the feedback principle of automation, and 
the servomechanisms which implement it, to virtually every situation where 
human control of industrial processes is now used. The growing flood of new 
uses of automation indicates how quickly the economics of its application are 
being worked out 

EVEN ROUTINE TECHNOLOGY IS ACCELERATING 

One of the factors which has been responsible for the steadiiy increasing rate 
of productivity since World War II has been the enormous increase in research 
expenditures both by industry and by Government Alfred North Whitehead, the 
British philosopher, once said, “The greatest invention of the 19th century was 
the invention of the art of inventing.” We might add that one of the great de¬ 
velopments of the 20th century has been to change inventing from an art to 
a standard business procedure. The research department is now a fixture in 
every important corporation, while the needs of government, especially in 
national defense, have added to the numbers of research workers, many of 
whose discoveries are readily applied to industry. 

As a result, the flow of what may be considered routine technological innova¬ 
tions—new production methods, new materials and machines applicable only 
to specific processes or industries, and improvements in work flow—has been 
greatly accelerated. Harlow Curtice, president of General Motors, noted recently 
that “new products, new processes are coming off the drawing boards of the 
engineers and out of the laboratories of the scientists at ever faster pace.” 

This great expansion of industrial research, and the flood of routine tech¬ 
nological innovations it produces, have been sufficient, alone, in recent years, to 


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boost the rate of rising productivity to the extent that past notions of what were 
normal productivity increases are already obsolete. Technological improve¬ 
ments of this sort, and on an increasing scale, can be expected to continue. 
By themselves, they would pose serious problems of adjusting our economy so as 
to provide sufficient purchasing power to absorb the steadily accelerating flow 
of goods which can be produced with every man-hour of labor. 

“WE ABE MERELY ON THE THRESHOLD OF THE TECHNOLOGICAL AGE” 

Beyond these routine technological improvements, however, we are now con¬ 
fronted with the potentially explosive impact of automation, and we can be 
sure that this new technology, too, will grow by leaps and bounds. 

In discussing the rapid advances of technology, David Sarnofl, chairman of the 
Radio Corporation of America, stated in a pamphlet entitled “The Fabulous 
Future.” 

“The quantity of new powers and products and processes at man’s disposal 
is important; but even more important is the increasing speed at which these 
things have come. It is not a case of continued increase but of continued ac¬ 
celeration of increase. We need only project the trend into the future to realize 
that we are merely on the threshold of the technological age.” 

Summing up the potential impact of the new technologies, Mr. Sarnofl says: 

“The very fact that electronics and atomics are unfolding simultaneously is 
a portent of amazing changes ahead. Never before have two such mighty 
forces been unleased at the same time. Together they are certain to dwarf 
the industrial revolutions brought about by steam and electricity.” 

ORGANIZED LABOR WELCOMES AUTOMATION 

What is the attitude of the trade-union movement, and specifically of the 
CIO, to this new technology of automation? 

First of all, we fully realize that the potential benefits of automation are 
great, if properly handled. If only a fraction of what technologists promise 
for the future is true, within a very few years automation can and should make 
possible a 4-day workweek, longer vacation periods, opportunities for earlier 
retirement, as well as a vast increase in our material standards of living. 

At the same time, automation can bring freedom from the monotonous drudgery 
of many jobs in which the worker today is no more than a servant of the machine. 
It can free workers from routine, repetitious tasks which the new machines can 
be taught to do, and can give to the workers who toil at those tasks the op¬ 
portunity of developing higher skills. 

BUT WE CANNOT SIDESTEP ITS PROBLEMS 

But in looking ahead to the many benefits which automation can produce, we 
must not overlook or minimize the many problems which will inevitably arise 
in making the adjustment to the new technology—problems for individual work¬ 
ers and individual companies, problems for entire communities and regions, 
problems for the economy as a whole. 

What should be done to help the worker who will be displaced from his job, 
or the worker who will find that his highly specialized skill has been taken over 
by a machine What about the businessman who lacks sufficient capital to 
automate his plant, yet has to face the competition of firms whose resources 
enable them to build whole new automatic factories? Will automation mean 
the creation of whole new communities in some areas, while others are turned 
into ghost towns? How can we increase the market for goods and services 
sufficiently, and quickly enough, to match greatly accelerated increases in pro¬ 
ductivity? 

' Finding the answers to these questions, and many others like them, will not 
be an easy process, and certainly not an automatic one. Even if the greatest 
care is taken to forsee and meet these problems, adjustments for many people 
will prove difficult and even painful. If there is no care and no foresight, if we 
subscribe to the laissez-faire belief that “these things will work themselves 
out,” untold harm can be done to millions of innocent people and to the whole 
structure of our economy and our free society. 

The CIO insists that we must recognize these problems and face up to them. 
But our recognition that there will be problems, and serious problems, to be 
solved, does not mean that we are opposed to automation. We are not. We 
fully recognize the desirability, as well as the inevitability of technological 


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progress. But we oppose those who would introduce automation blindly and 
irresponsibly, with no concern for any result except the achievement of the 
largest possible quick profit for themselves. 

When the first industrial revolution took place, no effort was made to curb 
or control greedy, ruthless employers. Businessmen took advantage of un¬ 
employment to force workers to labor 12 and 14 hours a day for a pittance so 
small that not only wives, but children scarcely out of infancy, had to enter 
the factories to contribute their mite to the family earnings. The benefits which 
we today can so readily recognize as the fruits of the first industrial revolution 
were achieved only after decades of privation, misery, and ruthless exploitation 
for millions of working people. 

Most of us find it difficult to believe that the second industrial revolution— 
the automation revolution—can possibly produce similar results. But if vast 
social dislocations are prevented this time it will be only because the combined 
social wisdom of private groups and government will be used to prevent them. 

We now know that the greatest good of society is not served by permitting 
economic forces to operate blindly, regardless of consequences. We now know 
that economic forces are manmade and subject to controls, that the economic 
and social consequences of economic decisions can be forseen, and when the con¬ 
sequences threaten to be harmful, preventive action can be taken. That philos¬ 
ophy is expressed, however imperfectly, in the Employment Act of 1946. We 
recognize today that it is not only possible, but necessary, for the Government 
to analyze, to foresee and to give direction to the economic forces that determine 
whether we shall have prosperity or depression. 

Unfortunately, there are those who refuse to admit that automation poses 
any problems for individuals and for society as a whole. More unfortunately 
still, they are the very people who should be in the best position to foresee the 
difficulties that will have to be met, and in cooperation with Government and 
the trade unions, to take action to meet them. Their spokesman is the National 
Association of Manufacturers. Their attitude has been all too clearly expressed 
in a pamphlet issued by the NAM entitled “Calling All Jobs.” This pamphlet 
recognizes, and indeed elaborates on, the parallel between the first industrial 
revolution which ushered in the machine age and the second industrial revolu¬ 
tion which today is ushering in the age of automation. But with almost incon¬ 
ceivable blindness to the facts of history, the NAM completely disregards the 
misery and suffering that accompanied the introduction of the machine age, 
and dismisses all the protests of workers of that day as unfounded complaints. 

The workers of 150 years ago who tried to smash the machines that had taken 
away their jobs had ample foundation for their complaints. They were wrong 
only in their methods. Their real complaint was not against the machines, 
but against the blindness of society which allowed the machines to be used as 
a means of ruthless exploitation. 

MAGIC CARPET ECONOMICS ARE NOT GOOD ENOUGH 

We, in the labor movement today, have no complaint against the new technology 
of automation. We do not intend to let ourselves be misrepresented as opponents 
of automation. What we do oppose is the spirit of the NAM and those of like 
mind, whose views are expressed in the closing sentences of the pamphlet pre¬ 
viously referred to: 

“Guided by electronics, powered by atomic energy, geared to the smooth, 
effortless workings of automation, the magic carpet of our free economy heads 
for distant and undreamed of horizons. Just going along for the ride will be 
the biggest thrill on earth.” 

We do not believe that any thinking person is prepared to accept the NAM’s 
magic-carpet theory of economics. Automation holds the promise of a future 
of new abundance, new leisure, and new freedoms, but before that future can 
be achieved there will be many serious and difficult problems to be solved. We 
do not believe that the American people or the Congress are prepared to just 
go along for the ride. 

MANY PROBLEMS CAN BE FORESEEN 

Let us consider some of the specific problems that will have to be met. One 
of the major problems is that no one as yet has made a thorough study of what 
has been done in the field of automation, what is being planned for the near 
future, or what impact it has had or will have on our lives. As a result, an 
exhaustive list of the problems that automation will pose does not yet exist. 


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There are some problems, however, which can be foreseen. Obviously, there 
will be problems for the workers who are displaced from their jobs by auto¬ 
mation. This is not merely a problem of finding a new job. One point on 
which most of the writers on automation seem agreed is that, by its very nature, 
automation will tend to eliminate unskilled and semiskilled jobs, while the new 
jobs it creates will be at a much higher level of skill. As one spokesman for the 
Ford Motor Co. has put it: “The hand trucker of today replaced by a conveyor 
belt might become tomorrow’s electronic engineer.” 

That sounds very nice, but it immediately poses the problem: How does the 
hand trucker become an electronics engineer—or a skilled technician? If auto¬ 
mation destroys unskilled jobs and creates skilled jobs, means must be found to 
train large numbers of unskilled workers in the needed skills. 

Another aspect of the same problem is that of the worker with a specialized 
skill who finds that his skill has been made valueless because a machine has 
taken over his job—such as the skilled machine operator displaced by a self- 
operating lathe or the bookkeeper whose job is taken over by an electronic 
“brain.” 

You can easily see that if automation is going to displace any substantial 
number of workers in either of these two ways, we will need a carefully organ¬ 
ized retraining program to give them the opportunity of acquiring the skills 
they will need. Such a program must take into account the needs of the work¬ 
ers, the fact that most of them will be mature men and women to whom the 
learning of new skills may not come easily, and that they have to live and sup¬ 
port their families while they are acquiring these skills. The program will 
require not merely training facilities and expert vocational guidance. It will 
have to include provision for training allowances to replace lost wages during 
the training period. 

Without such a program, there may be a job as an electronics engineer for 
the hand trucker’s son, but the hand trucker himself may have to join the ranks 
of the unemployed—one of a “lost generation” of workers who will have been 
scrapped as ruthlessly as so many items of obsolete equipment. 

“he couldn’t keep up” 

An alternative solution will have to be found in the case of older workers, 
not old enough for normal retirement, but too old to learn new skills or to 
adjust to the demands of the new technology. A single instance will be enough 
to point up the problem. This is from a report in the New York Post: 

“Then there are workers who can’t keep up with automation. Such as Stan¬ 
ley Tylak. Tylak, 61 and for 27 years a job setter at Ford, was shifted from 
the River Rouge foundry machine shop to the new automated engine plant. He 
was given a chance to work at a big new automatic machine. 

“Simply, straightforwardly, he told his story: ‘The machine had about 80 
drills and 22 blocks going through. You had to watch all the time. Every few 
minutes you had to watch to see everything was all right. And the machines 
had so many lights and switches—about 90 lights. It sure is hard on your 
mind. 

“ ‘If there’s a break in the machine the whole line breaks down. But some¬ 
times you make a little mistake, and it’s no good for you, no good for the fore¬ 
man, no good for the company, no good for the union.” 

“And so Stanley Tylak, baffled by the machine he couldn’t keep up with, had 
to take another job—at lower pay.” 

This was a case where automation resulted in downgrading—not the upgrading 
so widely heralded by industry spokesmen as one of the fruits of automation. 
Yet in one sense Stanley Tylak was lucky. He at least was able to take another 
job. In many cases there will be no other jobs available for a man in his sixties 
or even younger. Perhaps if Stanley Tylak had been given more than just a 
chance to work at the new machine, perhaps if he had been given careful train¬ 
ing for the job, taking into account the difficulties of adjustment to a new job 
at his age, he could have learned to do it even at 61. But for those older workers 
who cannot adjust, I think we must be prepared to offer the opportunity of 
early retirement with the assurance of an adequate pension. 

In some of our collective bargaining agreements we have already laid the 
foundations for a system of early retirement which could help to meet such situ¬ 
ations. But in the very nature of most private pension plans the problem cannot 
be solved through collective bargaining alone. Industrial pension plans are 
based on the assumption that the worker, when he retires, will also be eligible 


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for social security benefits. Much as we have improved the level of private 
pensions in recent years, a worker who is forced to retire before the age of 66 
would find it impossible to maintain a decent standard of living on his industrial 
pension alone. I would strongly urge this committee to consider, in formulating 
its recommendations, the need for earlier social security payments to workers 
who are forced into retirement before the age of 65 because technological changes 
have taken their jobs from them and their age makes it impossible for them to 
find other work. 

COMMUNITY DISLOCATIONS 


The growth of 'automated factories can create problems of dislocation not only 
for individual workers but for whole communities. It is often cheaper to 
build a new plant from the ground up, so that the whole design of the buildings 
can be related to the industrial processes, than to attempt to remodel an existing 
plant In addition, corporations frequently seem to prefer to employ on auto¬ 
mated processes workers who have had no experience with older methods. Thus 
an employer whose only concern is his own profit may decide that it is to his 
advantage to build a new plant in a new location, perhaps hundreds of miles 
away—without any consideration for the old community. 

Automation is not the only technological change which may produce such shifts 
in industry. The large-scale conversion of atomic energy into electric power in 
quantities sufficient to supply the needs of industry is now an assured possibility 
which wUl become a reality within relatively few years. A more far-reaching 
possibility exists in the direct conversion of energy from the sun, which has al¬ 
ready been developed to the point of successful use in applications requiring 
ninnii amounts of power. Such developments can provide limitless new sources 
of power for industry, but they can also produce severe dislocations and shifts 
in the geographical distribution of industries. . , .. 

Many of the large industrial centers in our country today owe their location 
to ease of access to coal or other power sources. With the advent of new power 
sources the advantages of such locations may disappear and large-scale move¬ 
ments of industry to new areas may well take place. ^ . . .. 

Let me make it clear that we are not opposed to such changes when they 
are based on sound economic and social considerations. Such changes are part 
of the long-run dynamic economic growth, upon which the advance of prosperity 
depends. But it would be foolish to deny that changes of this sort will produce 

th |oeciaf assistance will be needed to prevent the spread of distressed comma- 
nities and there will be innumerable questions to be answered. When impor¬ 
tant industries move out of town, for example, what can be done to replace them 
with others? Should workers be encouraged to move to a new community, and 
if so what help will they need in relocating themselves? When the movement 
of industry means a sudden burst of expansion for some communities, or per¬ 
haps the creation of brandnew towns and cities, what help will they need in the 
way of housing programs and the building of schools, hospitals, and other com- 

m Even today,^here are scores of distressed communities in our Nation, where 
hundreds of thousands of workers have been left stranded by shutdown plants, 
industry migration, closed coal mines, and curtailed operations of railroad 
repair shops. The impact of automation will possibly create additional pockets 
of substantial unemployment, even if high-employment levels are maintained 

na GoverMQent assistance is required to aid in solving the pressing problems of 
such communities at present; Government assistance has not yet been forth¬ 
coming, despite campaign promises that were made in the fall of 1952. Addi¬ 
tional Government aid will be needed in the future, as the new technology be¬ 
comes widespread. „ , 

These are existing problems that result from the accumulation of routine 
technological change. Are we going to permit their multiplication and aggra¬ 
vation during the period of the widespread introduction of automation? 


LONG-BUN MOBILITY IS NOT GOOD ENOUGH 

There is a tendency among management spokesmen, including some manage¬ 
ment-oriented economists, to dismiss these problems with the phrase “mobility 
of labor." Workers who are displaced from their jobs in one community, so the 
argument runs, will simply move to another community where workers are 


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needed and Jobs are plentiful. Some have even suggested that proposals like 
tbe guaranteed annual wage, or other measures designed to cushion the shock 
of readjustment, are harmful because they interfere with the mobility of labor. 

As any study of real life situations, like Professor Miernyk’s Inter-Industry 
Labor Mobility, will show, for a substantial proportion of workers no real 
mobility exists. Because of financial obligations, family responsibilities, strong 
community ties, or simply because they are too old to hope to find new Jobs, 
they continue to cling to their home communities. 

In the long run, of course, the labor market will show a high degree of mobility, 
because in a stranded community, the older workers will eventually give up the 
search for nonexistent jobs and retire from the labor market, and few younger 
workers will move in to take their place. But that concept of mobility represents 
merely the use of statistics to camouflage the reality of a myriad of individual 
tragedies. 

Even to the extent that labor is mobile, we know that such mobility can be 
achieved only at a price—the cost of retraining, the cost of moving and rehousing, 
etc. Those who consider that all of management’s responsibilities can be made 
to disappear by invoking the term “mobility of labor” take it for granted that 
working people should be prepared to bear all the risks and pay all the costs of 
economic changes which destroy their jobs. Such an attitude is both irrational 
and irresponsible. As Prof. Walter S. Buckingham of Georgia Institute of 
Technology has said: 

“There is no reason why labor should be more mobile, flexible and willing to 
assume the enormous risks of economic dislocation than the other components 
of production—capital, management and natural resources—which are to varying 
degrees organized, concentrated and immobilized. Indeed sacrifices made by 
other factors of production in participating in a competitive market are ordi¬ 
narily much less than those made by labor * * *. The worker has not his, or 
someone else’s, money at stake, but his life, and his children’s lives, on the 
auction block of the commercial market” 

THE EMPLOYEE’S RESPONSIBILITY 

Although most of the needed help will have to come from governmental agen¬ 
cies, we should also give serious thought to the responsibility of business itself 
in attempting to solve these problems. 

I have said that we welcome dynamic growth in our economy, even while we 
recognize the problems that such growth may bring. But we must not permit 
business to excuse irresponsible actions with the claim that, “this is part of the 
process of dynamic growth.” The shutting down of a plant, the displacement 
of thousands of workers, the dislocation of whole communities, cannot be jus¬ 
tified simply because a corporation accountant can show that the potential 
profits to the corporation are greater than the direct costs reflected in the 
corporation’s books. 

In the program for a guaranteed annual wage, toward which the trade union 
movement has taken a long first step this year, one of our objectives has been 
to curb irresponsible action on the part of employers by requiring them to pay 
some of the social costs of policies which result in unemployment. In the 
same way, consideration should be given as to whether the costs of helping in¬ 
dividual workers to adjust to the changes produced by automation should be 
borne by society as a whole, or whether some means should be sought to insure 
that the employers will bear a share of the burden. 

For example, if the result of automation is that a large number of workers 
in a plant have to learn new skills, I believe it is just as reasonable to expect 
the employer to pay the cost of retraining, including the payment of wages during 
the retraining period, as it is that he should pay the cost of building the new 
plant or installing the new equipment. When a plant is moved to a new locality, 
I believe the employer has a responsibility, not merely to retrain those workers 
who wish to move with the plant, but also to bear at least part of their cost of 
moving and new housing. These are just as much costs arising out of the 
employer’s business decision, as the business costs he now takes for granted. 

This is primarily a matter for collective bargaining, but I feel the committee 
should be aware of it. In our experience with employers—and it has been 
considerable—the one sure way of making them socially responsible is to make 
them financially responsible for the social results of what they do or fail to do. 


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AUTOMATION AND EDUCATIONAL NEEDS 

The transition to the new technology will require a great expansion in our 
education system. As I have already noted, there seems to be general agreement 
that one of the results of automation will be a substantial raising of the level 
of skills required in automated factories and offices. That will require, in turn, 
a vastly improved program of vocational education to train young people in the 
new required skills, as well as to retrain the present working force for the 
responsibilities in automated operations. 

I want to emphasize, however, that it is not enough to provide merely the 
physical facilities—the schools, the teachers, the teaching equipment. It is 
equally necessary that students should have the economic means to delay their 
entry into the labor market so as to pursue their studies and training. Even 
today there are far too many young people dropping out of school before they 
should, simply because they and their families are not in a position to make the 
financial sacrifices that would be involved in their continuing at school. We need 
a greatly expanded program of financial aid to students through scholarships, 
and as the level of skill required in the factories of tomorrow rises, that need 
will be greatly intensified. 

With the spread of automation, there will be a growing need for specialized 
semiprofessional technicians, as well as for professional engineers and skilled 
workers. The education system of the Nation should be preparing now to meet 
these requirements. 

I have made particular reference to the need for an improved program of 
vocational education because it ties in directly with the needs of automated 
factories and offices for workers with new skills. But we should not stop there. 
One of the benefits we should expect to gain from the great increases in produc¬ 
tivity that automation makes possible is not only a reduction in hours of work— 
and I shall return to that subject in a few moments—but a reduction in the years 
of work. That reduction can be partly achieved by making it possible for more 
young people to continue their education in whatever field they choose and are 
fitted for. To meet the needs of our people, we require today far more teachers, 
doctors, nurses, and members of other professions than are now entering our 
schools to train for those professions. 

We are dangerously short of engineers, especially at a time when in Russia 
the school system is being deliberately oriented toward the education of vast 
numbers of engineers as a necessary basis of further industrial expansion. 
Professional training apart, we should make it one of the major goals of our 
society that every young person will have not only the physical opportunity 
but the economic means to gain the fullest education of which he or she is 
capable. 

AUTOMATION AND THE NATIONAL ECONOMY 

So far I have been dealing primarily with the impact of automation on 
individuals and on local communities. But even more serious consideration 
must be given to its possible impact on the economy of the Nation as a whole. 

From the viewpoint of the national economy, the greatest problem posed 
by automation is the threat of violent fluctuations in employment and produc¬ 
tion during the period of adjustment to the new technology. With the wide¬ 
spread introduction of automation speeding up the potential output of goods 
and services, there is the possibility that markets may not grow fast enough 
to sustain high employment levels. 

I am not reassured by those who tell us that all will work out well in the 
long run because we have managed to live through radical technological changes 
in the past. Human beings do not live long enough for us to be satisfied with 
assurances about the long-run adaptation of society to automation. And while 
it is true that radical technological improvements have been introduced in the 
past, it is well to remember that they were accompanied by vast social disloca¬ 
tions, recurring depressions, and human suffering. 

Most of us remember the depression of the 1930 , s only too well, when the 
American people paid a heavy price for the economy’s failure to adjust to the 
introduction of mass production after World War I. We should now be thinking 
about and planning for the transition period —the next 10 years or so—when 
the spread of automation may result in dislocations of our society and in distress 
for countless individuals and communities. 

Our economic needs will be rising in the years ahead. The population, it is 
expected, will increase from approximately 165 million at present to about 


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190 million 10 years from now. The number of households will rise from 
about 48 million now to an estimated 56 million in 1965. But the increase 
of economic needs does not mean that these needs will be filled automatically, 
adjust market demands to the rising output of goods and services, made possible 
by the new technology. We are compelled to rely, instead, on our own wisdom 
or lack of it, and upon our private and public policies. 

If the national economy expands with sufficient rapidity in the coming decade 
or two, along with the widespread introduction of automation, the problems 
posed by the new technology will be minimized and localized. But economic 
expansion does not arise simply because we desire it. Economic growth is the 
product of expanding markets that make possible the profitable utilization and 
further expansion of productive capacity. 

Even under normal conditions, the national economy is compelled to expand 
on a continuing basis if high levels of production and employment are to be 
maintained. In a year when the civilian labor force is some 62 to 64 million, 
as in the recent past, the economy is burdened with the responsibility of pro¬ 
viding over 3 million new job opportunities, when productivity rises 4 percent 
and the labor force increases by some 700,000. In other words, we have to 
increase our purchases of goods and services by an amount equal to the output 
of over 3 million workers to absorb the increase in the labor force, as well as 
the displacement effect of rising productivity. The answer to such a burden 
is economic growth—a 5-percent expansion of the Nation’s total output and; 
consumption of goods and services, equal to the combined percentage increases 
in productivity and labor force. 

It was substantial economic growth of that approximate magnitude—achieved 
through expanding markets—that gave us high levels of employment in much 
of the post-World War II period. But in 1949 and in 1953-54, we saw how 
easily our economy can be shoved off balance—when markets fail to expand 
fast enough to absorb the rising output of an increasingly efficient economy. 

These problems of attempting to maintain high levels of employment in the 
recent past will probably appear small by comparison with those that will 
demand our attention in the period ahead. One of the great challenges of auto¬ 
mation is that it continues present difficulties in much more serious form. 

THE SPREAD OF AUTOMATION WILL ACCELERATE 

There is sufficient evidence to indicate that automation will be spreading 
widely through the economy in the coming decade. Competition and the drive 
for reduced production costs are compelling the introduction of automated equip¬ 
ment. The Journal of Commerce of September 7, 1955, reported that a survey 
of 20 machine-tool companies at the national machine tool show “disclosed 
the belief that automation will probably make almost twice as much progress 
in the next 5 years as it has in the past 10.” 

“Demonstrated advances in productivity are amazing,” is the way M. A. 
Hollengreen, president of the Machine Tool Builders’ Association, put it to 
the Journal of Commerce reporter. “In case after case, new machines will do 
a job in a third, a tenth, or even a fifteenth of the time formerly required. Ad¬ 
vances in machine tools have never been as rapid as they have been in the past 
5 years, and most members of the industry expect the pace to be stepped up 
considerably in the next half decade.” 

Productivity is already increasing at a faster pace than in the long-run past. 
In commenting on recent productivity increases in manufacturing, the August 
1955 issue of the Federal Reserve Bulletin states that “output per man-hour 
has risen somewhat more rapidly over the past 2 years of recession and recovery 
than the average postwar rate of abut 4 percent a year.” 

In other words, man-hour output in manufacturing industries, which had been 
rising at an average annual arte of about 3 percent in the long-run past before 
World War II, rose to an average yearly rate of approximately 4 percent after 
the war and to somewhat more than 4 percent in the past 2 years. 

As a result of the sharp productivity increases of the past 2 years, employ¬ 
ment has lagged considerably behind the improvements in general economic 
conditions. This is particularly true in manufacturing. In September 1955, 
there were 600,000 fewer wage and salary workers employed in manufacturing 
industries than in September 1953 (17.5 million 2 years ago in September 1953, 
by comparison with 16.9 million in September 1955). 

Automation—in addition to the more conventional improvements in machines 
and work flow—will be increasing the rate of the national economy’s rising 

45006 0—59- S 


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man-hour output still further. Instead of average annual productivity Increases 
of some 3 to 4 percent, the annual rate of rising man-hour output In the national 
economy may reach 5 to 6 percent or more. 

With a civilian labor force of 70 million, 5 to 6 percent annual increases In 
the economy’s man-hour output would make it necessary to add about 3% mil¬ 
lion new job opportunities each year, merely to absorb the possible displacement 
effect of rising productivity. Another way of stating it is that annual pro¬ 
ductivity increases of 5 to 6 percent in the coming decade will be capable of dis¬ 
placing about 3% million or more employees each year, if the national economy 
fails to expand, along with the rapid improvements in productive efficiency. 

LABOR FORCE GROWTH EXPECTED TO ACCELERATE 

The problem grows still greater when we consider that the labor force will be 
increasing at an accelerating rate in the period ahead. And the accelerating 
growth of the labor force will require the addition of yet more new job oppor¬ 
tunities each year, if high levels of employment are to be maintained. 

The average annual growth of the civilian labor force at present is some 700,- 
000 to 800,000, according to Government estimates. In 2 or 3 years, the expansion 
of the labor force will be accelerating—when those who were born since 1939 
start looking for jobs (after taking account of probable increases in both school 
attendance of youngsters and retirement of the aged). The size of the labor 
force, according to Census Bureau estimates, will be expanding at a rising rate 
in the coming 10 years, at the same time when automation and other tech¬ 
nological changes will probably be pushing productivity increases above the 
rates of the recent past. 


Labor force growth 



Average annual increase 

Period 



Number 

Percent 



732,000 
609,000 
878,000 
698,000 
866,000 
1,172; 000 

1.6 

1930-40 . . _ - __ 

1.2 


1.5 

1960-55 __ ___ _ 

1.1 


1.2 

1960-65. 

1.6 




Source: Current Population Reports, Bureau of the Census, Series P-GO, No. 42, Dec. 10,1052. 


The civilian labor force, which has been growing at an average anual rate 
of about 1 percent in recent years, will probably be rising at annual rates of 1.2 
to 1.6 percent in the coming decade. The accelerating growth of the labor force 
in the years ahead will probably necessitate the creation of some 800,000 to 
1,250,000 new job opportunities annually, if high levels of employment are to be 
maintained. And this requirement is in addition to the necessity of the economy 
to prevent the disemployment each year of some 3% million or more workers, 
when productivity rises 5 to 6 percent annually. 

There is a possibility, therefore, that in the years ahead, the national economy 
will have to provide about 4% million or more new job opportunities each year 
to absorb both the increases in the labor force and the displacement effect of 
rising productivity. To do so, the national economy’s markets will have to expand 
more rapidly than in the recent past, when an average yearly 4- to 5-percent rise 
of the Nation’s total output was generally sufficient. 

With the labor force growing 1.2 to 1.6 percent a year in the coming decade* 
and man-hour output possibly increasing some 5 to 6 percent or more each year, 
the economy’s output of goods and services may have to expand by some 6 to 7 
percent or more annually, if high levels of employment are to be maintained. 

EXPANDING ELECTRONICS INDUSTRY WILL NOT TAKE UP SLACK 

There are those who tell us that this problem should be of no concern to us. 
An expanding electronics industry, they tell us, will automatically absorb workers 
who may be displaced from factory and office employment 

It is true that the electronics and machine-tool industries that produce auto¬ 
mation equipment are expanding. But productivity in these industries is rising 


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AUTOMATION AND TECHNOLOGICAL CHANGE 109 

rapidly, with the introduction of labor-saving devices, new materials and auto¬ 
mated equipment These industries, too, are being automated. 

A Department of Labor study states: 

“Electronics output in 1952 was 275 percent higher than in 1947 but was pro¬ 
duced only by 40 percent more workers. * * * 

“Output per man-hour (in the electronics industry) may rise even faster during 
the next few years as a result of improvements in manufacturing techniques. 
* * * These trends toward ‘automation’ may result in the greatest reduction in 
unit man-hours in the industry’s history during the next few years.” 

General Mills, Inc., the breakfast-food producer, for example, hasjumounced 
that it has put on the market a fully automatic machine for therproduction of 
electronic equipment. Galled Autofab, this new machine, it is said, will assemble, 
in a little over a minute, the same number of multiple-part electronic units that 
now takes one worker a full day to assemble. It requires only two workers and 
a supervisor, and has a capacity of more than 200,000 assembles a month, operat¬ 
ing 40 hours a week. 

I do not believe that we can complacently put our faith in the expanding 
automation-equipment industries to provide the large number of required job 
opportunities to maintain high levels of employment in the coming transition 
decade. Nor do I believe that the transition period to the era of the new tech¬ 
nology will be accompanied by rapid and large-scale job-producing secondary 
investment—sufficient to be an adequate shock absorber. There is no assurance 
whatsoever—and there can be none—of automatic and immediate adjustments to 
the widespread introduction of automation. 

Automation is a new technology with the possibility of economywide displace¬ 
ment effects; its major requirements are equipment and power from indus¬ 
tries whose productivity is rising at sharp rates. The new technology, for 
that reason, cannot be compared to a new product, such as the automobile whose 
widespread introduction was, of necessity, accompanied by secondary invest¬ 
ment in road construction, oil, rubber, steel, and glass. 

PRODUCTIVITY OF CAPITAL ALSO RISING 

Another factor that must be taken into consideration is that the productivity 
of capital is rising along with the productivity of labor. In some of the 
illustrations of automation I have given here today, it is noted that while the 
automatic machines cost more than those they replace, the increase in cost is 
less than the increase in productivity. That is to say, the investment per unit 
of production is actually less than that of the replaced machines. 

This is in line with a long-term trend. Recent studies published by the Na¬ 
tional Bureau of Economic Research, show a fairly steady rise in the produc¬ 
tivity of capital investment ever since World War I. 

The rising productivity of capital, as well as of labor, makes it more impor¬ 
tant than ever that consumer markets expand rapidly. 

There are those who try to tell us that there is no cause for concern, 
because increased productivity will automatically result in lower prices. The 
fallacy of this view is that automation finds its major field in the “administered 
price” industries, such as the automobile industry, where lower costs more 
often lead to higher profits than to reduced prices. For example, the Ford 
Motor Co. has announced that it expects to make a record profit this year. 
Yet rather than pass a share of that profit along to consumers in the form 
of lower prices, Ford has actually announced price increases on its 1956 
models. 

Then, there are the optimists in the sales departments and the advertising 
agencies who seem, quite honestly, to believe that we can sell anything we 
can produce if business will just put enough high pressure behind its advertis¬ 
ing and selling campaigns. They seem to think that consumer purchasing 
power will be created automatically. 

Only a little thought on the subject should be enough to convince anyone 
that consumer purchasing power will not be raised automatically. It will 
not be raised unless the benefits of increased productivity are passed along 
to the mass market of consumers through such measures as increased wages, 
reduced prices, and increased expenditures by Government in such fields as 
education and housing, as well as improved Government programs in such 
areas as social security and health. Increases in consumer purchasing power 
will arise, not from reliance on nonexistent automatic forces, but from the 
effort of private groups and Government. 


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RAPID GROWTH OF CONSUMER MARKETS IS ESSENTIAL 

I do not believe that people who seek out untenable reasons for complacency 
about the potential problems posed by automation are serving any socially 
useful purpose. Neither do I believe that one need be unduly pessimistic. I am 
firmly convinced that our economy can adjust to the challenge of automation, 
if we use our foresight and the combined wisdom of private groups and 
Government. It is wise social policies by private and public groups that are 
called for, rather than either smugness or pessimism. 

As I have already indicated, one major and rather obvious requirement for an 
orderly economic adjustment to the new technology is the continuing rapid 
growth of consumer markets, along with the economy's ability to produce a 
rising volume of goods and services. In the coming decade of transition to the 
widespread use of automation, emphasis will have to be placed—even more so 
than in recent years—on the need for consumer markets to grow rapidly. 

A basic cause of the depression of the 1930’s was our inability to realize during 
the 1920’s that while increasing productivity creates the possibility of expand¬ 
ing production, it must be accompanied by rising purchasing power so that con¬ 
sumers can buy the additional goods and services which can be produced. 

Increased man-hour output without growing markets is a formula for depres¬ 
sion. Without customers for the mounting output that will be made possible by 
the widespread use of automation, mass unemployment will be inevitable. 

I can asure you that organized labor will in the future, as in the past, do all 
in its power to maintain an expanding mass consumption base for the national 
economy. But the consumer purchasing power needs of the coming decade will 
require, to a greater extent than in the past, that business accept collective 
bargaining and the right of workers to continuing improvements of their living, 
conditions. 

Rapidly growing consumer markets, however, require more than price reduc¬ 
tions and union gains in wages, guaranteed wage plans and fringe benefits. They 
likewise require Federal, State, and local tax structures that will provide 
expanding consumer purchasing power, especially among the millions of low- 
and middle-income families. They require, too, an adequate unemployment 
compensation system for unemployed workers, and an improved social-security 
system for retired workers, and a generally liberal monetary policy that will 
encourage small business, farmers, and consumers to expand their investments- 
in plant, equipment, homes, and consumer durables. 

THE MINIMUM WAGE SHOULD BE INCREASED TO AN ADEQUATE LEVEL 

The needed rapid growth of consumer markets will require further increases^ 
in the statutory minimum wage. According to the staff report, prepared for the 
Senate Labor Committee, which investigated the minimum wage, the increase- 
from 75 cents to $1, which comes into effect next year, will not be sufficient to- 
take into account the combined effect of the increase in the cost of living and 
increased productivity since the beginning of 1950, when the 75-cent minimum» 
became law. 

In a period of sharply rising productivity, it is a national disgrace that a 
country as wealthy as ours should still have a considerable number of workers 
earning no more than a bare subsistence. The $l-an-hour legal minimum wage, 
effective March 1, 1956, should be revised to $1.25 without delay, and coverage 
under the law should be extended. As a matter of public policy, we should, 
adopt a program designed to increase statutory minimum wage levels, sub¬ 
stantially faster than increases in productivity, until they shall have reached, 
a point where we need no longer be ashamed of them. 

LENGTH OF THE WORKWEEK MUST BE REDUCED 

An important step toward minimizing potential social dislocations during: 
the coming decade of transition to, the new technology would be the reduction in. 
length of the workweek. 

In the past the rise in man-hour output has made it possible to increase both 
leisure and total output. Rising productivity at present—and the more rapid 
increases expected in the coming decade—makes possible further increases in* 
leisure. 

The reduction of the workweek to 35 or 30 hours in the coming decade can be¬ 
an important shock absorber during the transition to the widespread use of auto- 


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mation. It can both reduce the impact of sharp rises in output and increase the 
manpower requirements in industry and commerce. 

The past reduction of the workweek to 40 hours, and the prevalence of paid 
vacations and holidays, have brought a share of the fruits of industrial progress 
to wage and salary earners in the form of increased leisure. These proud 
achievements of organized labor and the New Deal have contributed to the grow¬ 
ing importance of leisure-related activities—such as educational, recreational 
and cultural facilities, do-it-yourself, gardening tools, sports equipment, motels, 
and vacation resorts. ' 

The further reduction in the length of the workweek, below 40 hours, in the 
years ahead will probably result in a stimulus for additional leisure-related 
activities—additional education, museums, libraries, parks, sports, and resort 
centers. 

The 30- or 35-hour week, the 2%- or 3-day weekend, extended vacations, early 
retirement for older workers, and increased schooling for young people—these 
are some of the possibilities that arise out of the anticipated rapid increases in 
productivity during the coming decade. But we will not achieve these possibili¬ 
ties without planning for them and working for them. 

In many industries we will be able to achieve a further reduction in the work¬ 
week through effective trade-union organization and collective bargaining. But 
the increased leisure which automation makes possible will not be enjoyed by 
all groups of Americans, except through legislation to shorten the statutory work¬ 
week under Federal and State laws. Here is an area in which a continuing 
study of industrial conditions and the effect of automation on employment can 
be particularly valuable as the basis for recommendation to Congress for legis¬ 
lative action. 

In the same way, we will not achieve early retirement under the Social Secu¬ 
rity Act, or increased vocational training, or improved educational opportunities 
for young people without Government guidance and action. 

One of the fruits of automation, which we should welcome, is the oppor¬ 
tunity it gives us to meet the present and growing social deficits in health, 
housing, schools, highways, natural resources, and other public services. 
Through increased productivity, our economy can meet the cost of these long- 
delayed measures, without strain—and their achievement will help, by creating 
new jobs, to ease any necessary adjustments in employment. 

But I hope we will not wait until unemployment has become a serious prob¬ 
lem before we make a start. Millions of new homes, at least a million new 
hospital beds, hundreds of thousands of added school classrooms will be re¬ 
quired within the next few years, simply to meet the needs of a growing popula¬ 
tion for adequate housing, health and educational facilities. 

The rapid productivity increases that automation makes possible should 
enable us to devote increasing attention to social welfare and public services. 
Such activities should be viewed as a means of strengthening the fabric of our 
society, rather than as mere antirecession devices. 

SMALL BUSINESS BBQUIRES AID 

The maintenance of high levels of employment nationally is the major require¬ 
ment to reduce the size and nature of the possible problems posed by automa¬ 
tion. Nevertheless, the dynamic changes of the transition period—even with 
high levels of employment generally—will probably be felt by some groups of 
workers and businesses. For them the impact will be harsh, and some fore¬ 
thought by private groups and Government must be given to devising means of 
assistance. 

Many small business firms, as well as workers, may find themselves in distress 
during the period of transition to the new technology. In some industries, auto¬ 
mation equipment may be so expensive—and the required output so large—as to 
make its use prohibitive by small or medium-sized firms. 

Small business has been hard pressed in the past 2 years. Business failures 
rose sharply in 1954. They remain high now, despite the general improvement 
in economic conditions. Last June there were 914 business failures by com¬ 
parison with 965 in June 1954, 817 in June 1953, and 671 in June 1952. 

Small and medium-sized business has not shared in the recent prosperity of 
the giant corporations. 

The quarterly financial reports on United States manufacturing corpora¬ 
tions, issued jointly by the Federal Trade Commission and the Securities and 
Exchange Commission, show that between the first quarter of 1953 and the 


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first quarter of 1955, manufacturing companies, with assets of $100 million or 
more, increased their sales by $2.2 billion; their profits before taxes went up 
by $450 million, and their profits after taxes by $591 million. 

In the same period, the sales of all other manufacturing corporations de¬ 
clined by $2.5 billion, their profits before taxes fell by $578 million, and their 
profits after taxes were lower by $102 million. 

These figures have the closest bearing on the economic questions posed by 
automation. For the most part, it is the large companies that will be in the best 
financial position to scrap old equipment and old plants, and replace them with 
new automated machines and automated plants, thus increasing still more the 
margin of efficiency which they enjoy over their smaller competitors. 

It is possible that relatively low-priced electronic computers will be available 
for smaller firms. It is also possible that some types of multiple-purpose auto¬ 
mated equipment will be available for medium-sized plants whose products are 
mixed. But in industries where a great volume of identical products are made— 
as in the automobile industry—the required output for profitable operations may 
be so great, and the cost of the equipment may be so high, as to make it difficult, 
if not impossible, for small firms to purchase automated machines. 

Government policy should be aimed at assisting small business firms to main¬ 
tain their existence. A generally liberal credit policy—with low interest rates— 
is an essential part of such programs to enable small businesses to obtain funds 
for investment in expensive automatic machinery. Long-term Government loans, 
at low interest rates, for industrial and commercial expansion, should be made 
available to small- and medium-sized firms. Government procurement policies 
should aim at getting work on Government contracts to smaller businesses. The 
antitrust division of the Justice Department should be instructed to be more 
vigilant than it has been in the recent past in the effort to eliminate monopolistic 
practices in industry. 

Automation may bring with it the danger that big firms will grow even bigger, 
while small- and medium-sized competitors are squeezed against the wall. The 
danger must be minimized by Government policies and actions to assist small 
business and prevent trends toward monopoly. 

SUGGESTED POLICIES 

Automation has been hailed as the “second industrial revolution.” But no 
radical change in technology can take place without parallel changes in the eco¬ 
nomic structure. 

It is within our power to see to it that these economic and social changes take 
place in an orderly and evolutionary manner—toward improved standards of liv¬ 
ing and social welfare, an extension of leisure and new horizons of individual 
opportunities for educational and cultural achievements. Such evolutionary 
changes in the coming decade will require forethought, planning, and guidance. 
If we permit the new technology to follow its own blind course, directed only by 
the selfish interests of those who would utilize it for their own immediate profit, 
our free society may be subjected to dangerous disruption in a world beset by 
international tensions. 

We cannot permit any weakening of our national strength nor any under¬ 
mining of our social fabric. The Communists are only too willing to assist in 
such an endeavor. We should take advantage of the rising productivity that auto¬ 
mation makes possible to increase our national strength and improve living stand¬ 
ards at the same time. 

High levels of employment and rapid economic growth must be achieved in the 
period ahead. But those goals can be attained only through growing markets that 
will expand rapidly, along with the economy’s rising productivity. A positive 
Government effort is required to provide the expanding markets that are the 
basis for economic growth. 

Organized labor is doing its part, through collective bargaining for higher 
wages, extended vacations and holidays, guaranteed wage plans, improved pen¬ 
sion and health-welfare plans. There is no need to defend these social gains won 
by unions for millions of working people; they stand on their own merits, and 
rising profits, generally, indicate that business has been able to pay for them. 
But the power of big corporations to administer prices has tended to dilute some 
of the benefits of these improvements. 

A national approach is needed to help make certain that the benefits of auto¬ 
mation will be shared among all groups in the population. A congressional 
inquiry into the price policies of giant corporations, for example, is long over- 


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due—to place the spotlight of public attention on the failure of the dominant 
corporations to pass on to consumers the benefits of rising productivity. 

There is need, too, for a more equitable distribution of the tax burden, an 
adequate unemployment compensation system, improved social-security benefits, 
a higher legal minimum wage and reduced legal workweek, protection of farm 
income, improved educational facilities, financial aid to students, and an extended 
program of hospital and road construction, and natural resources and develop¬ 
ment. 

CONTINUED STUDY IS ESSENTIAL 

We in the CIO do not pretend to have the answers to all the problems posed 
by automation. We are quite sure, in fact, that no one can have all the anwsers 
at present. Not nearly enough is known yet about the current achievements of 
automation, the planned progress of automation, or the precise impact that 
automation will have on productivity, on employment, and on the national 
economy. 

No one in industry or Government has yet gathered together in one place enough 
information about what is happening in the field of automation to have the full 
story. Individual companies know what they are planning or already have 
done, and corporations manufacturing automation equipment may know what 
their customers are doing, but there is still the job of putting this knowledge 
together coherently. 

I hope that in these hearings the subcommittee will ask representatives of 
various corporations, who come before it, to answer specific questions about 
what their companies have done and intend to do in the way of introducing auto¬ 
mation, and the impact of automated equipment on manpower requirements. 

I would urge that a continuing study of the social and economic impact of 
the new technology be made, either by members of the staff of this subcommittee, 
or by some Government agency to which the subcommittee might recommend that 
the task be entrusted. 

Through these hearings and a continuing study, we should find out just how 
much displacement of manpower in industry has already resulted from auto¬ 
mation, to what extent the displaced workers have been absorbed into other 
jobs with their own employer or with some other employer, the impact of 
such displacement on older workers, how many displaced workers have been 
able to find other jobs, how many are unemployed, how many displaced workers 
have retired from the labor market, and how adequate are the incomes of those 
who have retired. We should find out to what extent displaced workers tend 
to move into jobs like their old ones, and to what extent they are forced to 
accept lower-paid jobs requiring less skill. 

From these hearings and future studies, we should find out to what extent 
the introduction of automation, by firms which are able to expand their share 
of the market, has resulted in the disemployment of workers in other companies 
that have not been able to make the investment in automated equipment. For 
example, it has been said of the auto industry, that automation in Detroit has 
resuled in unemployment in South Bend. Some employers may be able to tell 
this committee that they have been able to maintain, or even increase, their 
employment in spite of automation. But that is only half the answer, if ex¬ 
pansion on the part of such employers has resulted in unemployment in other 
plants and in other communities. 

A thorough study should be made of the industrial movements which may be 
anticipated over the next several years—the industries and geographical areas 
most likely to be affected, and the problems that will probably be created both for 
workers and for their families, and for the affected community. 

Particular attention should be concentrated on the prospective rate of pro¬ 
ductivity increases, as a result of automation and other technological advances. 
This information is essential if we are to have an idea of the required increases 
in consumer purchasing power and the possibilities for the rapid reduction in 
the length of the workweek. It is likewise essential if we are to be able to plan 
private and public policies intelligently for continued economic growth and the 
maintenance of high levels of employment. 

STUDIES MUST LEAD TO ACTION 

The results of these hearings and ensuing studies should lead to positive rec¬ 
ommendations from this subcommittee to the Congress. Such recommendations 
should cover the problems of displaced workers, industry migrations, stranded 


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communities, small business, and education requirements. Above all, such 
recommendations should promote national economic policies, designed to expand 
consumer-purchasing power, with sufficient speed, so that we shall be able to 
buy and consume the vast flood of goods and services made available by auto¬ 
mation. Such policy recommendations should be aimed at taking full advantage 
of the opportunities presented by rapid productivity increases—to improve Fed¬ 
eral, State, and local facilities in health, housing, education, natural resources, 
and other fields of public activity. 

We must do all in our power to make sure that the potential abundance of the 
new technology will be used with social wisdom to improve standards of living 
and welfare, and to provide increased leisure, for all Americans. 

These are great tasks. In the years that lie immediately ahead, we shall 
have to undertake these tasks, because the new technology confronts us with a 
tremendous challenge. If we refuse to accept that challenge, if we fail to solve 
the problems that will probably crowd upon us, we may be forced to undergo 
shattering economic dislocations that could threaten our whole economy and 
our free society. 

If we accept the challenge of the new technology, if we use foresight and act 
wisely and vigorously, we can help to usher in an age of abundance and freedom, 
the like of which the world has never known. 


Appendix to Testimony of Walter P. Reuther, President of Congress of 

Industrial Organizations 

Several Recent Examples of Automation 

Industry and technical journals, as well as newspapers and magazines, contain 
frequeint stories of the advance of the new technology. The following is a mere 
handful of such recent examples of the spreading development and utilization of 
automation: 

[From the New York Times, March 28, 1955] 

Automatic Milling Machine To Cut Lead-Time Drastically 

The Air Force announced the award of a $1,128,000 contract to the Oonvair 
Division of the General Dynamics Corp. on March 27,1955, to develop the aircraft 
industry’s first electronically controlled milling machine. This automatic machine 
will be controlled by an electronic computer and will be based on the development 
of the automatic milling machine at MIT. It will be capable of producing pro¬ 
totype parts, as well as production parts. Convair engineers estimate that the 
machine will save as much as 85 percent of the lead time on some parts and 
about 15 percent of the lead time on very complex parts. 


[From the American Machinist, August 1, 1955, p. 106] 

Turret Lathe Controlled From Punched Tape Can Be Run by Unskilled 

Operator 

Electronic control by means of a punched tape permits a Jones & Lamson 
Machine Co. turret lathe to be used on short-run jobs, thus opening new fields 
of application, and allows an unskilled operator to replace a highly skilled lathe 
operator. 

“Setup, heretofore, required a skilled operator or a setup man,” says the 
American Machinist. “Now the setup is planned by a methods engineer or ‘pro- 
gramer* and the tape is punched accordingly by a clerk—both in the office. 
The tape is delivered to the machine with the shop order and operation sheet 
or tool scheme. An unskilled operator can mount the numbered, ‘plug-in/ preset 
tools according to the chart and can place the tape in the machine director. As 
simply as this, the machine is ready to produce pieces. 

“Upon completion of the run, the tape can be stored in a filing-cabinet drawer 
for future uses, such as new orders, to replace scrap, or for spare parts. Standard 
tapes can be prepared for routine operations, frequently repeated, and kept on 
hand to expedite simple jobs or to simplify preparation of complicated setups.” 


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The machine does not produce contours in the manner of the MIT milling 
machine, but provides rectilinear motions with precise control at the end points. 
In addition the tape controls: 

Choice of 16 spindle speeds, at any time and without stopping the spindle; 
Indexing six-position turret to any face at any time; 

Indexing four-position turret on cross-slide to any face at any time; 
Operation of hydraulic-powered collet chuck and bar feed; 

On or off control of coolant; 

Closing and opening of hood; 
liesetting of tape to repeat cycle. 


[From Instruments and Automation, January 1955, p. Ill] 

TRANSFER MACHINE FOR AXLE HOUSINGS INCREASES PRODUCTIVITY 3.6 TIMES WITH 

LOWER INVESTMENT 

A transfer machine produced by the Cross Co. performs the operations of 
boring, facing, drilling, chamfering, and tapering on axle housings. When the 
machine was installed in 1952 it replaced 5 separate machines which originally 
cost a total of $270,000, but which would cost $540,000 to replace today. The 
cost of the transfer machine was only $318,000. 

On the old machines, 3 men turned out 10 pieces per hour. On the new* 
machine, 2 men turn out 24 pieces per hour. Productivity is 3.6 times as great 
per man-hour. 


[From American Machine & Foundry Co. leaflet] 

AUTOMATIC BOWLING ALLEY PINSPOTTER 

An automatic pinspotter developed by AMF Pinspotters, Inc., a subsidiary of 
American Machine & Foundry Co., replaces the pinboy in bowling alleys with 
a completely automatic operation. As pins are knocked down, they are picked 
up on an endless belt in the pit and placed in the machine for resetting, while 
the ball is automatically returneed to the bowler. A lighted indicator shows 
how many balls have been used in each frame and what pins are still standing. 
Standing pins are lifted after each ball and then replaced, but if a pin has been 
knocked off its spot and left standing, the machine replaces it exactly in the off- 
spot position from which it was lifted. The machine operates with two sets of 
pins, so that in case of a strike or a foul the second set can be put in place with¬ 
out delay while the first set is being picked up and returned to the pinsetting 
mechanism. 


MACHINE WITH ELECTRONIC MEMORY AUTOMATICALLY BALANCES CRANKSHAFTS 

A machine developed by the Tinius Olsen Co. uses an electronic memory which 
enables it to balance crankshafts automatically to within one-half ounce-inch 
of perfect dynamic balance. 

A scanning screen receives impulses which are made by scanning the revolv¬ 
ing crankshaft. If the crankshaft is out of balance, the machine determines 
how much it is out of balance, and where the imbalance is located. An elec¬ 
tronic memory unit retains all the information transmitted to it while the 
crankshaft was previously revolved. Then, with the crankshaft held stationary, 
the machine automatically sets into action drills which remove the exact amounts 
of metal required to establish perfect balance in the crankshaft. 


[From the Wall Street Journal, June 17, 1955] 

BANK COMPUTER CALCULATES INTEREST ON 290,000 SAVINGS ACCOUNTS IN 33 HOURS 

The Western Saving Fund Society, Philadelphia's second largest mutual 
savings bank, has installed computer equipment that will make year-end in¬ 
terest computations on the bank’s 290,000 savings accounts in 33 hours—a job 
that used to take “a large force” of workers 3 weeks. 


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[From Business Week, June 18, 1955] 

AUTOMATIC ASSEMBLY OF BADAB SETS 

An automatic assembly machine for assembling military radar sets has 
been produced by General Mills, Inc., for International Business Machines Corp. 

With a single machine, components are fitted onto a chassis automatically. 
The machine can produce about 200,000 assemblies a month. In 1 minute it 
produces 20 assemblies, as many as a fairly fast hand assembly line could pro¬ 
duce in 20 minutes. 

Business Week states the same principle is now being introduced in produc¬ 
tion of television sets. It claims that through a combination of automatic as¬ 
sembly, etched wiring and dip soldering, by 1966 a production line with about 40 
people will be able to produce as much as a line of 125 people doing the same 
operations by hand. 


[From the Wall Street Journal, April 1955] 

ELECTBONIO BRAINS TO “BUN” WAREHOUSE OPERATIONS 

Super Valu Stores, Inc., of Minneapolis, which supplies 560 stores in 2 chains 
of independents, has ordered 2 medium-sized electronic “brains” from Remington 
Rand for two of its warehouses. They will— 

Turn out a daily inventory report in 30 minutes—a job now taking 1 
person 40 hours; 

Take a complete bookkeeping inventory in 30 minutes, against 240 man¬ 
hours now required; 

Notify buyers automatically when warehouse stocks of any product have 
run out; 

Type out a purchase order automatically when stocks of Any item reach a 
minimum reordering level; 

Tell warehouse personnel exactly where they can find any product, and 
how much of it is there; 

Garry out billing, sales analysis and general accounting functions. 

The machine is described by its developers as a “high-speed idiot,” but If it 
makes an error it is able to discover the slip itself through a series of self¬ 
checking devices. 

The “brains” are expected to be in operation in about IS months. 


[From the New York Times, Juno 16, 1955] 

AUTOMATIC “SKIN MUX” OUTS MACHINING ON AIRCRAFT WINGS FROM 60 HOURS IO 

8.25 HOUBS 

Simmons Machine Tool Corp., Albany, has produced a 225-ton automatic “skin 
mill” to be used in manufacturing one-piece wing panels for the F-ll super-sabre 
jet at the North American Aviation Co. plant in Los Angeles. 

Electronically and hydraulically controlled, the 225-ton machine will sculpture 
the aircraft wings in a fraction of the time required by conventional machining 
methods. Simmons officials say it can accomplish in 3% hours a complex 
machining operation that formerly took 60 hours. It can turn out two wing 
panels simultaneously, its carbide-tipped cutters making longitudinal, transverse, 
and diagonal channels according to intricate patterns. 

Simmons says the machine is one of the first examples of automation in manu¬ 
facturing large, strong, integrally stiffened aircraft wings. It has 2 consoles 
with banks of pushbutton stations comprising 60 individual controls. Its cutting 
tools can remove as much as 250 cubic inches of metal per minute. 


[From the Wall Street Journal, October 6,1955] 

SANTA FE ROAD TO GET ELECTBONIO SYSTEM TO HANDLE RESERVATION8 

Teleregister Corp. of Stamford, Conn., will install equipment on the Atchison, 
Topeka & Santa Fe Railway in the first steps toward a coast-to-coast electronics 


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network for handling of passenger accommodations. The Santa Fe equip¬ 
ment will be integrated with similar equipment to be intalled on the New York 
Central and New York, New Haven & Hartford Railroads. 

The electronic equipment will keep track, automatically, of all reserved 
accommodations. It was said that a traveler will be able to get confirmation of 
bis reservation in little more than the time it takes for him to light a cigarette. 

The target date for coordinated installation of the Teleregister equipment 
is the middle of 1956. 

The Chairman. If you desire, you can speak impromptu, extem¬ 
poraneously, or otherwise, just as you choose. 

Mr. Keuther. Thank you. 

I would like to elaborate extemporaneously on the problem as we 
see it. 

We believe that we are really standing on the threshold of a com¬ 
pletely revolutionary change in the scientific and technological devel¬ 
opments that we have experienced. We believe that in addition to 
the problem of automation, which is the general term used to define 
the new technology, we also face the possibilities, the promise and 
the problems that will flow from the peacetime use of atomic energy 
and ultimately the use of solar energy. 

We believe that the challenge is great, but that the opportunity 
is even greater. As we in the labor movement visualize this problem, 
we believe that this is the first time in the history of human civili¬ 
zation that we are achieving the technology, the tools of production, 
that will enable us as free people to master our physical environment. 
For centuries and centuries and centuries people have been struggling 
to find a way to satisfy their basic economic and material needs, to 
get enough food in their empty bellies, to get enough warm clothing 
on their naked backs, and to provide decent shelter. For centuries 
they have struggled with the economics of scarcity; now we are 
entering that period of human history when the tools of abundance 
made possible Dy developing science and technology make it possible 
for mankind to meet basic economic and material needs. 

And, having satisfied these needs, we can devote more time, energy, 
and resources to facilitating man’s growth as a social being, as a cul¬ 
tural and spiritual being. This means that the possibility of adding 
value to human civilization and the dignity of the individual now is 
greater than ever before, provided we have the good sense and the 
sense of moral and social responsibility to use these new-found tools 
in the interest of all of the people. 

So we welcome the development of science and technology. We are 
very happy that industry is able to have more efficient tools, but we 
insist that we find a way to gear the efficiency and the greater produc¬ 
tivity and greater abundance to the basic needs of all of the people. 

I believe that this developing technology is going to put in the hands 
of freemen the tools with which they can prove that the Communists 
are wrong., Karl Marx, many years ago, attempted to analyze history. 
He attempted to try to develop a description of the underlying moti¬ 
vating forces that made people and nations move, and so he wrote 
the book that everyone knows about, Das Kapital, but he was 
wrong. He was wrong because historically he analyzed the world 
in terms of a struggle between people and nations and groups to 
divide up economic scarcity. One nation was well fed because another 
nation was hungry. One citizen had many of the good things of life 


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because some other citizen was denied the good things of life, but 
Marx was wrong because he did not and perhaps could not have visual¬ 
ized the unlimited possibilities of cooperating in the creation and 
sharing of abundance. 

Adam Smith was wrong, because he also could not understand the 
tremendous possibilities of abundance. 

And so here we are, standing on the threshold of a development of 
science and technology that will enable us to solve the problems that 
have plagued the human family for these many thousands of years. 
And the great challenge is not “are the engineers going to develop 
the tools?” because they are. The great challenge is, are we as a free 
people going to be equal to that challenge, by demonstrating that we 
know how to use these tools for human betterment, for elevating living 
standards, for giving people more security, and, in the atmosphere 
of security, facilitating the growth of the human spirit and the dignity 
of man. 

That is really the great challenge. We have said many, many times 
that the struggle in the world between our way of life, between the 
forces of freedom and the forces of tyranny, on the other hand, is more 
than just a struggle for geography; that essentially it is a struggle for 
men’s minds and their hearts and their loyalties. 

We believe that that struggle will not be won with guns, no matter 
how big or how powerful an H-bomb may be developed. In the final 
analysis what we do with our economy, what we do in gearing the 
abundance open to us to the needs and the hopes and aspirations of 

S eople, how we demonstrate the capacity to deal with practical human 
ay-to-day problems, is going to win for us in the struggle for men’s 
minds and their hearts and their loyalties, not in the areas of develop¬ 
ing the H-bomb. The H-bomb is necessary, but it is the negative as¬ 
pect of this struggle. It is the holding action. We are going to win 
on the positive end of this struggle, by demonstrating that we as a 
free people know how to mobilize our productive resources and to gear 
the abundance now possible to the needs of the people. 

The Communists, of course, in their propaganda to try to win over 
people in the uncommitted portions of the world, have always promised 
economic security; when you are hungry—and most of the people of 
the uncommitted world are hungry—when you are hungry enough 
and desperate enough you will take most anything, as the way out. 

The Communists are hoping to win over people in this world 
struggle by offering them the promises of economic security, despite 
the fact that in every country in the world where the Communists have 
seized power they have as yet failed to deliver on that promise. Even 
if they do deliver, the price is too great, because in order to get bread 
in your stomach you have got to put your soul in chains; in other 
words, you have got to trade your political and spiritual freedom for 
a loaf of bread. 

We face the practical problem of having to demonstrate, not in the 
ivory academic towers, not in a general way, but in a specific and 
tangible way, that you can have both bread and freedom; that you 
can take care of your economic and material needs, and that, having 
done that, you can enjoy a greater measure of political and spiritual 
freedom. 


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Now, how do we go about doing that ? That is really the great prob¬ 
lem. We believe that the Geneva Conference marked a turning point 
in the cold war, in the struggle between the forces of freedom and the 
forces of tyranny, and we believe that we need to understand what is 
transpiring. The Russians, in my opinion, have made no change in 
their long-range struggle for world domination. They have made 
only a tactical shift, in the way they intend to pursue their struggle 
for world domination. 

If you will look at the situation in Europe—and I have just come 
back from Europe and the Middle East, where I had a chance to talk 
to labor leaders, government leaders, to industry leaders, to educa¬ 
tional leaders, and to people connected with the various faiths—I 
have a feeling that the Russians, in their new look, are attempting to 
lull the free world to sleep, and they are attempting to make it look 
as though the threat, that was real and great was now being dimin¬ 
ished. And because people may think the threat is being diminished, 
they hope to destroy, or to weaken, the common denominators that 
hold the free world together. What are those common denominators? 
Essentially they are tne common denominators of fear and hatred. 
They think if they can taper off the negative forces of fear and hatred 
that hold us together that we will go back to business as usual, to life 
as usual, and that the free world alliance will begin to disintegrate. 
What we need to understand is that the Communists will succeed 
unless we develop a new set of common denominators, built around 
positive human values, as the cement that holds together the free world 
alliance. 

I believe that in looking at the problems of automation you have got 
to evaluate them, not only in terms of the needs of America, not only in 
terms of our own domestic economic problems, but that you have got to 
look at automation and the new tools of production in terms of the total 
struggle that free men must wage against the forces of tyranny in the 
world. 

We believe that America must maintain a strong military posture, 
because none of the underlying factors that made for a strong military 
posture last year, or 2 years ago, have changed; but, while maintain¬ 
ing a strong military posture, we must take the offensive on the eco¬ 
nomic and social fronts in the struggle against poverty and hunger 
and human desperation in the world. It is on that front that 
freedom must win over tyranny. 

Some recent changes should indicate to us what the Russians are 
about in their new look. Last week they offered countries in the 
Middle East arms; a week later they offered them unlimited tech¬ 
nical assistance—in any phase of technical development that these 
countries asked assistance in. That means that the Russians are 
going to work harder and harder and harder on the subversion of 
people by economic assistance programs, by technical assistance pro¬ 
grams. And that means that America, the strongest of the free na¬ 
tions of the world, needs to do more in this area. And automation 
and the new sciences that are developing provide us the tools with 
which to do this job. 

Our great dilemma in America, Mr. Chairman, as we understand 
it, is the fact that we have made much more progress in the physical 
sciences than we have made in the human and social sciences. We 


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know a great deal more about working with machines than we know 
about how to work with people. One of the problems that we have 
got to work on, as this whole technological development moves for¬ 
ward, at ever accelerated speed, is the finer way to develop comparable 
know-how in the human and social sciences, to match the know-how 
that we have in the physical sciences. 

What we need to do is to match our scientific, technical, and pro¬ 
duction know-how with comparable human and social and moral 
know-how. The production process is not the end. It is the means 
to the end. The end is the enrichment of human life. The end is 
to meet man’s basic needs, within the framework of an expanding 
intellectual, political, and spiritual freedom. We can do these things 
only if we learn to match our technology in the physical sciences with 
comparable technology in the field of sociology, in the field of politics, 
in the field of human relations. 

It is in that spirit that we approach the problems of automation. 
We welcome automation. 

There has been a great deal of propaganda. Even the Secretary 
of .Commerce has misrepresented the position of American labor with 
respect to automation. He woud have you believe that we are op¬ 
posed to automation. We are not. We welcome any development 
that will lighten the burden of human labor. We welcome any step 
forward that will make it possible for mankind to create greater 
economic wealth, with less human effort. 

What we do insist upon ? however, is that we find a way to gear this 
developing technology, this greater economic abundance, to tne needs 
of all of the people. 

We have said many times that really the measurement of the great¬ 
ness of our society is not how much economic wealth we have, nor the 
size of our material resources, nor the level of our technological 
development; the real measurement of the worth of any free society 
is the ability of that free society to translate technical progress into 
human progress, into human happiness, into human dignity. So we 
welcome automation; but we say that unless we develop broad eco¬ 
nomic, and social policies, to insure that this new power is used 
responsibly in the economic and social and moral sense, then automa¬ 
tion, instead of building a brave new world, can dig our economic 
graves. 

It is because we raise these problems that people have attempted to 
say that we were opposed. We believe that we have got to look at 
this problem realistically, with honesty, and with courage. When you 
say there is a problem here it doesn’t mean that you are opposea to 
automation. It merely means that you are trying to anticipate the 
problem so that we can meet it in advance. 

The first industrial revolution created many serious problems. The 
economy was dislocated, hundreds of thousands of workers were 
turned on the streets to wander without homes, without hope. We 
believe that the second phase of the industrial revolution can bring 
about dislocation unless we plan to meet the problems it raises. 

The other day, I am told, one of the vice presidents of the Ford 
Motor Co. came before your committee. I think he gave you a lot of 
very valuable information, but I take issue with one conclusion that 1 
he left with your committee when he said that automation is just an 


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extension of the normal technological evolutionary process. I believe 
that is an understatement of what automation is. Automation is the 
second phase of the industrial revolution. 

James Watt, when he developed the first simple and crude steam- 
powered machine, which was used in the textile industries of England, 
made the first step toward the substitution of mechanical power for 
human power—mechanical muscles replaced human muscles. We took 
that simple beginning and we developed our mass-production economy. 
But automation is not-just an extension of that technological process. 
Automation makes a completely new development in the technological 
process because automation, in addition to substituting mechanical 
power for human power, begins to substitute mechanical judgment 
for human judgment—the machine begins to substitute the thinking 
process on a mechanical basis for the flunking process which hereto¬ 
fore was done exclusively by the human mind. 

The machine has a memory in which you can store all sorts of com¬ 
plex information. With specific impulses you can bring that infor¬ 
mation out of the memory and with it begin to instruct the machine 
to do very complicated tasks. 

This is why automation is not a normal extension of the technologi¬ 
cal process which was initiated at the beginning of the industrial 
revolution, but marks a second phase of the industrial revolution. 

It means that because the machine now cannot only replace h uma n 
power, but can replace human judgments, its impact will be much 
greater than the impact of the first phase of the industrial revolution. 

I think it is dangerous wishful flunking to believe that the prob¬ 
lems of automation will not be great ana will not be complex and 
will not be challenging. If by wishful thinking you could brush 
these problems under the rug and forget about them, I should be very 
happy to join in that kind of wishful thinking. But you cannot 
brush them under the rug. You cannot look the other way. They 
are challenging. You have got to meet them. To the extent we face 
them with honesty and witn courage, and with conviction, to that 
extent we as a free people will be able to find answers to these 
problems. 

We got in trouble in 1929—not because the problems that we faced 
in 1929 were insurmountable. Every problem that we had in 1929, 
when the stock market crashed, and all of the problems of human 
suffering that followed those dark years of depression, were prob¬ 
lems that were manmade; none of them was ordained by Almighty 
God. None of them were beyond man’s ability to master. But peo¬ 
ple said we were on the high road of permanent prosperity; that only 
utopia lay ahead, and all that we had to do was to buy a couple of 
more shares of stock and ride the magic carpet to perpetual prosperity. 
And then the world came tumbling down around our ears. 

All we are saying is that there are problems, and that we need to 
recognize that there are problems, and we need to deal with those 
problems realistically. If we do that, we can make the transition 
that this second phase of the industrial revolution will bring about: 
we can make it with a minimum of dislocation, with a minimum oi 
hardship, with a minimum of heartbreaks, and we can all have more 
of the good things of life. 

Now, if we got in trouble in 1929 because people tried to brush the 
problems under the rug, we will get into more serious trouble if peo- 


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pie attempt to brush out of sight and mind the problems that auto¬ 
mation and peacetime use of atomic energy—and some day solar 
power—will confront us with. 

I think it is just this simple, Mr. Chairman: The economy that we 
had in 1929, compared to the economy that we have today, and will 
have tomorrow, and will have the year after tomorrow, was a model T 
economy, and we are now dealing with a high-octane, supersonic, jet 
economy. If we got in trouble driving the model T in high gear, it is 
just a matter of common horse sense that a smashup under modem 
conditions would be even more catastrophic, because we are moving at 
faster speeds. The faster we move, economically speaking, the more 
we need to think ahead and anticipate the problems. 

If you are driving a car at 20 miles an hour, your mental process 
only has to move fast enough to think in terms of what is ahead at 20 
miles an hour. A jet pilot, flying a supersonic jet at 600 miles an 
hour, is not thinking about what is happening where he is. He is 
always thinking about what is going to happen a minute from now, 
because in that minute he will travel a tremendous distance. What is 
true of a jet pilot is true of those people who are responsible for guid¬ 
ing a jet propelled economic machine. It is not good enough for us 
to think about today. We have got to anticipate the problems of to¬ 
morrow, because only if today we anticipate the problems of tomor¬ 
row can be begin to do today what is necessary to meet the problems 
of tomorrow. 

So we have been trying to urge that today, Government, industry, 
and. labor, agriculture—all of the free segments of our free economy— 
begin to recognize the problems and begin to work cooperatively in 
meeting these problems. 

Now, basically what is our problem? Basically, our problem is the 
problem of maintaining a dynamic, expanding balance between our 
growing ability to create greater and greater economic wealth, re¬ 
flected by our expanding productive power, and on the other hand, the 
ability to expand purchasing power in the hands of millions and mil¬ 
lions of American families, so that we can maintain this dynamic ex¬ 
panding balance: Greater productive power, greater purchasing 
power, still greater productive power, still greater purchasing power, 
always achieving a dynamic expanding balance at higher ana higher 
levels of economic achievement, ever higher economic plateaus. The 
answer to the problem of achieving this dynamic balance between 
greater productive power and greater purchasing power is the key 
to where the free American economy is going. And I believe it is the 
key to where freedom in the world is. going. The basic needs of people 
are net static. Needs are largely a reflection of your ability to satisfy 
needs. What people had a hundred years ago will not meet our needs 
today. What we have today will not meet our economic needs tomor¬ 
row. You have got to measure how well we are satisfying people’s 
needs, not by the standards of yesterday, but by the level of technology 
and by the tools that we have at our disposal in meeting these basic 
needs today and tomorrow. 

We in the CIO have unlimited faith in the capacity of our free 
economy to meet these needs, but we believe we must be constantly 
vigilant^ we have constantly to work on the problem. If we got in 
trouble in 1929 because there were powerful groups in America resist¬ 
ing the efforts needed to keep this dynamic balance between productive 


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power and purchasing power, it would be dangerous and unrealistic to 
believe that those forces now are going to roll over and play dead. 
They are going to be in there, exerting the same pressures that they 
exerted in the pre-1929 period; unless those pressures are offset by a 
stronger counterpressure, then they will do the damage in the period 
ahead that they did in the period before 1929. 

I would like very briefly to list some of the areas in which we think 
automation is going to develop and some of the problems. The range 
of automation is very broad. It has already had a tremendous impact 
in many segments of our economy. It has been applied to whole 
plants, to whole industries, it has been applied to a single machine. 

Take the automated lathe, one simple example. A lathe now can 
be automated and can operate from 5 to 8 hours without the need of 
supervision. It will change the tools automatically when the old tool 
wears out. And before the tool completely wears out, the lathe keeps 
making periodic adjustments to allow for the normal wear in the tool, 
so that the part being machined will maintain the same precision as 
the first piece that the machine turned out. 

Most people think of automation as something affecting just the 
auto industry, or basic metalworking industries, out we have seen a 
recent example where automation is being applied in the building in¬ 
dustry, where the Cleveland Building Supply Co. has automated the 
mixing of cement. They have an electronic machine that can control 
the mixing apparatus and dump it into a truck and give you 1,500 
different mixes, each with the exact amount of the various ingredients. 
Already it is being applied in the building industry. 

Perhaps the most dramatic example of automation in the automotive 
industry is the Ford Motor Co.’s new engine plant, which you probably 
have heard a great deal about. 

I have here some pictures and some charts of some of the types of 
machines that we have in the auto industry which I should be happy 
to leave with the chairman. 

You have a situation lyhere a rough casting comes out- 

The Chairman. That is the Cleveland plant ? 

Mr. Reuther. The Cleveland Ford engine plant, where a rough 
casting comes out of the foundry. (The foundry is automated, because 
the sand is dumped into huge hoppers and the other ingredients that 
go into manufacture of cores for the foundry and the manufacturing 
of the cores is all automated.) The rough casting comes into the 
machining operation. It is fed into the machine, and the first opera¬ 
tion is to machine the top of the cylinder block and the bottom where 
the crankcase goes on. It takes 13 seconds to do that operation. It 
just goes “whoosh” and it is done. The rest of the operations are 
worked from those two machined surfaces. The automated lathe then 
bores the cylinder block. After the cylinder block is bored, the electric 
eye measures the block and, if it is not to the exact size required, an 
electric impulse goes to the brain of the machine, and the tool is 
adjusted, a new cut is taken, it comes back up, the electric eye 
measures it. 

If it is the size, it goes to the next operation. That machine block 
comes Out the other end in 14.6 minutes, without a human hand touch- 
ingit. 

Some years back, we made the first engine block in 24 hours, from 
a rough casting to the finished block. To machine a rough casting 

4500ft 0—59-9 


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to the finished motor block in 24 hours was hailed as unprecedented 
technological achievement. Then we got it down to 9 hours; the old 
equipment in the Rouge Ford plant did it in 9 hours. 

We jumped to 14.6 minutes. That is just the beginning, because 
they have drawings on the engineering drawing boards now that will 
do it in less time than 14.6 minutes. 

When you go through the Ford engine plant—and I would urge 
strongly that you spend a couple of hours going through some of 
these plants—it is hard to find the workers. They are hidden behind 
huge electrical panels, on which there are red, green, and yellow lights. 
They sit there watching these lights. Every tool on every operation 
has a green light, a yellow light, and a red light, and when all of the 
green lights are on, it means that all the tools at each work station 
are operating up to standard. When a yellow light comes on, on tool 
No. 38, it means that the tool is still performing, but the tool is be¬ 
coming fatigued, and that is a warning sign, so that the operator sit¬ 
ting there looking at these panels will know that he has to get a re¬ 
placement tool for tool No. 38. He stands by at that position on the 
automated machine, and at the point the red light would kick on, on 
the board, he walks over—the machine automatically stops—he puts 
the new tool in the place of the tool that is worn out, and automati¬ 
cally the green light comes on and the machine goes on. 

When I went through this plant the first time I was told by a top 
pfficial of the Ford Motor Co.: “Mr. Reuther, you are going to have 
trouble collecting union dues from all of these machines.” 

And I said: “You know that is not bothering me. What is bother¬ 
ing me is that you are going to have more trouble selling them auto¬ 
mobiles.” 

That is the real significance. We have mastered the know-how of 
mass production, and what we need to do is to develop comparable 
distribution know-how so that we will have markets for the tremen¬ 
dous volume of production that automation now makes possible. 

I know that industry obviously will attempt to play down the im¬ 
pact of automation upon levels of employment, and I could give you 
the figures that the union has worked out. But I would, prefer to give 
you a quote out of Newsweek as to what the impact bias been in the 
Ford automated engine plants. 

Newsweek reports that the production has doubled, with 10 percent 
of the work force. 

That is the general overall impact of automation upon manpower 
in industrial plants. There is a radio plant in the East, where they, 
had 200 workers assembling radios. They automated the assembly 
part of that plant, and 2 workers turn out now a thousand radio sets 
a day, where formerly 200 workers were required. 

Automation, unlike the first phase of the industrial revolution, will, 
I believe, have a greater impact upon white-collar workers than upon 
industrial workers, because it is easier to standardize many operations 
that white-collar workers do in the clerical field than it is to stand¬ 
ardize some phases of industrial production in terms of metalworking. 
We are going to witness not only a tremendous impact of automation 
upon the industrial worker, and industries employing industrial 
workers, but we are going to witness and experience a greater impact 
upon those industries in which clerical and white-collar workers his¬ 
torically have been employed. 


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Banks are already automating. These electric brains not only can 
make out the checks, but can store in their memories temporarily the 
facts that they have recorded on a check; when the check is cleared, 
they pull out of their memories the information and then make the 
final entries in the books. 

Insurance companies are going to automate their whole insurance 
offices and lay off thousands of clerical workers. 

Inventory control that required thousands and thousands of clerical! 
workers throughout American industry is going to be automated. 
You are going to be able to know inventory facts much more quickly f 
in 30 minutes you will know an inventory picture that, by the old pro¬ 
cedure, with hundreds of clerks working, would have taken weeks ta 
get. 

This impact is not something that is just going to affect the auto¬ 
mobile workers or the chemical workers or the radio workers or the 
steel workers in what we consider to be the basic industries. It is 
going to have tremendous impact in every section of economy, and I 
believe a greater impact in the white-collar field. 

Some people would have you believe that we have already felt the 
major impact of automation, but that is not true. We are just on the 
threshold of this new development. Automation is in its early in¬ 
fancy; in the years ahead, it is going to mature and the impact is 
going to be much greater in every segment of our economy. 

The Journal of Commerce, on September 7, 1955, reported a survey 
made among 20 machine-tool companies at the time of the national 
machine-tool show: 

Their survey disclosed the belief that automation probably will make almost 
twice as much progress in the next 5 years as it has in the past 10 years. 

I should like also to quote from a statement from Mr. M. A. Hollen- 
green, president of the Machine Builders Association. He said: 

Demonstrated advances in productivity are amazing. In case after case, new 
machines will do a job in a third, in a tenth, in one-fifteenth of the time for¬ 
merly required. Advances in machine tools have never been as rapid as they 
have been in the past 5 years, and most members of the industry expect the 
pace to be stepped up considerably in the next half decade. 

So here are two illustrations from business sources—not CIO propa¬ 
ganda, not A. F. of L. propaganda, not reports of scaremongers, as 
some people would have us appear in their propaganda, but reports 
from industry showing that we are just beginning to feel the tre¬ 
mendous impact of automation. 

The Chairman. May I interrupt to say Mr. Hollengreen will be 
a witness before this committee, Thursday, October 27. 

Mr. Reuther. Very good. I am glad to hear that. 

Mr. David Sarnoff, who is the chairman of the RCA Corp., made 
a speech, reprinted in a pamphlet entitled “The Fabulous Future.” 
We would like to share his optimism with this committee. He said 
in his speech: 

The quality of new powers and processes at man’s disposal is important, but 
even more important is the increasing speed at which these things have come. 
It is not a case of continued increase, but of continued acceleration of increase. 
We need only project the trend in the future to realize that we are merely on 
the threshold of the technological age. 


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That is exactly the point I would like to underscore, “we are just 
beginning.” We are just beginning to get our big toe wet in the 
held of automation; when we wade in up to our knees, the impact 
will be tremendous; when we get up to our Adam’s apple, it will be 
much greater. 

Mr. Sarnoff goes on to say: 

The very fact that electronics and atomics are unfolding simultaneously is a 
portent of amazing changes ahead. Never before have two such mighty forces 
been unleashed at the same time. Together they are certain to dwarf the 
industrial revolutions brought by steam and electricity. 

Now if every big business group in America shared that point of 
view and had a little bit of that vision, and then attempted to take 
that vision and bring it into focus in terms of practical, day-to-day 
problems that we need to meet, and solve, then we would have no 
problem. But, unfortunately, there are still powerful forces in the 
big-business community who believe that there are no problems. And 
that point of view is, I think, very well expressed in the pamphlet put 
out by the National Association of Manufacturers. 

They put out a pamphlet called Calling All Jobs. Here is what 
they said: 

Guided by electronics, powered by atomic energy, geared to the smooth, effort¬ 
less workings of automation, the magic carpet of our free economy heads for 
distant and undreamed of horizons. Just going along for the ride will be the 
.biggest thrill on earth. 

They think that you can solve the problems of tomorrow just like 
you sell toothpaste—just talk about bigger and better days ahead, the 
magic carpet will take us all to the promised land without effort. 

Now there are bigger and better and finer days ahead, but we will 
not get there by some magic carpet. We will get there by meeting 
the practical problems that must be met in order to get to where we 
want to go. It is this kind of irresponsibility, this effort to brush 
the problems under the rug, that bothers us. 

Here again we have a point of reference, a frame of reference. 
What did the NAM do in the period before 1929? Go back and read 
their propaganda. Go back and see what they were doing then. They 
were resisting every effort that was advanced to try to meet the prob¬ 
lems that we failed to meet and that caused the problems in 1929. One 
year before that crash they would have had the American people 
believe that we were riding on that magic carpet, and that the possi¬ 
bilities for human progress were unlimited. All we had to do was to 
relax, and to have confidence. 

Well, the trouble is that they always confused complacency with 
confidence. We want to have confidence, but we don’t want to confuse 
it with complacency. It is this kind of reckless and irresponsible com¬ 
placency that just says, “Let’s ride the magic carpet to utopia” that 
frightens us, because that is why we got in trouble in 1929. 

We believe that we need to wrestle with the practical problems. 
Only as we wrestle with the practical problems can we solve them: only 
as we solve these problems can we be certain that the productive power 
and the abundance now made possible by our developing technology in 
automation will be geared to the need of the people. 

What are some of the problems ? 


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Well, there is the problem of dislocation of whole communities. We 
know—and as automation develops to higher and higher levels of per¬ 
fection this fact will be even more true—that in case after case it is 
more economic to build a completely new factory to house an auto¬ 
mated production process than to attempt to convert or rehabilitate 
an existing plant. 

What does that mean? 

It means that in many cases industry will locate new factories that 
are fully automated, not in the areas in which the old factory was 
located, but in an entirely new area. And as we get into the peace¬ 
time use of atomic energy and solar power and the sources of industrial 
energy and industrial power are changed, it means that the locations 
of industry may shift m>m old to new areas. 

Now, it is very fine for a corporation executive or a member of the 
board of directors to make a decision to locate a new plant that is going 
to be three times as efficient as the old plant in a new area, to build it 
in a cornfield and close down the old plant, but what about the people 
who live in the community where the old plant is located? 

This is not some problem dreamed up to frighten people. Just go- 
up to New England and go into some of the textile centers that have 
already become ghost towns. Go into some of the coal mining regions 
of Pennsylvania, where people have been unemployed for many years, 
and you can begin to visualize this problem. We have got to begin to 
think in terms of the impact of automation, the impact of this develop¬ 
ing technology upon communities in which old factories are located. 

Industry must begin to realize that it has an overall economic and 
social and moral responsibility to plan the location of new auto¬ 
mated factories in terms of the impact of those new factories upon 
existing industrial communities. 

This does not mean that forever and forever and forever an in¬ 
dustry that is located in a certain geographical area of our country 
must remain there. When there are sound and compelling economic 
advantages to justify the relocation of an industry, then the industry 
ought to be relocated, but the economic impact of that relocation 
should not be forced upon the shoulders of the workers in the plant 
that was shut down, or the community in which that plant was 
located. 

If the whole of society is going to gain an economic advantage by 
the relocation of that factory, then, since the whole of society gets 
the advantage, why should a small group of workers or one com¬ 
munity have to pay the price? 

These are problems that we need to meet. The Government and 
industry together must find a way to minimize the economic impact 
upon the communities directly affected, and upon the workers. 

With respect to the broad community problem, obviously you are 
dealing there with a problem in which the Government has a major 
responsibility. 

In the area of the problems affecting the worker, there are many 
things that need doing. First of all, the worker will have to be re¬ 
located. If he is a young worker, that problem is not nearly so 
difficult. If he is an older workingman, whose roots are deep in the 
community, who has spent his whole life there, the problem is obviously 
more difficult. 


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Industry must be willing to assume part of the costs of relocating 
workers. There is also the problem of retraining. It is very fine for 
industry persons to say glibly that a hand trucker who was elimi¬ 
nated by an automatic conveyor or belt today will become the elec¬ 
tronics engineer of tomorrow. It is very fine, but it is not automatic. 

If you are going to take a worker who is displaced by a simpler kind 
of technology and train him for integration into a more complex 
kind of technology, then you have got to have a training program to 
make that possible; the worker has got to eat while he is being trained, 
and his children must continue to have the basic economic things 
that they need every day in the period of training. We have got to 
do more than just glibly talk about the hand trucker of today be¬ 
coming the electronics engineer of tomorrow. We have got to create 
training programs to facilitate the training and we have got to 
work out economic programs of assistance so that during the period 
of training and relocation the worker’s family is taken care of. 

These are long-range problems. We have got to recognize that 
in the broad sense we need to expand, not only our vocational training 
facilities, but also to broaden our facilities for higher educational 
training. We are falling behind. The Russians are training more 
engineers than we are. We can be smug in America and we can talk 
about how we are better, and in most areas we are better, but the gap, 
the difference between what we are doing and what they are doing 
is getting smaller and smaller. When they turn out more engineers 
ana more technicians in their universities than we are turning out, 
it is just a matter of time until the impact of that greater effort in 
training engineers and technicians will begin to reflect itself in their 
rate of technological progress as compared to our rate of technological 
progress. 

We need to raise our sights to provide more opportunities for peo¬ 
ple to get technical training, engineering training, and scientific train¬ 
ing. We need to find a way to give more people in America, more of 
our young people, a chance to have access to educational opportunities 
at tne higher level, instead of being barred or handicapped by the 
economic position of the breadwinner and the family in which they 
grew up. 

Every child in America who can make a contribution ought some¬ 
how to have an opportunity to grow intellectually, limited only by 
his capacity to learn and understand. That means we need a scholar¬ 
ship program that will facilitate educational opportunities of every 
child, commensurate with the capacity of that child to grow, not 
limited by the economic circumstances of the family in which the child 
grew up. 

~ We don’t object to the relocation of factories where there is sound 
economic reason, providing that the community is protected, provid¬ 
ing the worker is protected, and providing he is relocated and re¬ 
trained, but we have no patience with the theory that says, “Well, this 
is a normal thing, this dislocation and relocation. It is a normal thing 
in a free economy. This is the worker’s contribution to progress.” 

That is very fine, if you are taken care of, to have that theory, but 
it is very tragic if you happen to be the worker involved. We have 
got to recognize that these are developments and forces beyond the 
control of the individual worker, and beyond the control of the indi- 


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vidual Community. We need to think in terms of meeting these as 
an overall problem, requiring both governmental action and requiring 
greater responsibility on the part of industry itself. 

Recently we have made progress in a direction which will help cush¬ 
ion these problems of relocation, retraining^ and transfer. We now 
have almost a million workers in the auto industry, and related in¬ 
dustries, covered by the guaranteed annual wage. We said from the 
very beginning that the guaranteed annual wage was more than a 
matter of economic justice to the wage earner; it was an essential part 
of the basic necessities of our free dynamic economy. 

What happens if a worker is covered by GAW and he gets dislo¬ 
cated? The employer has an economic obligation. He has the obli¬ 
gation to continue to pay that worker during the period of his idle¬ 
ness, and you watch now much better job the employer will do in 
locating new plants if he has a continuing economic obligation under 
a guaranteed annual wage. 

You watch how much better he plans the transition from the old 
factory to the new factory. 

You watch how much quicker he can recall those workers, and how 
much more dedicated he is going to be to find an effective way to train 
them, so that they can master the new skills in the automated factory, 
where he has a continuing obligation. 

We said from the very beginning, we don’t want to be paid for not 
working. The guaranteed annual wage is not brought forward as a 
kind of glorified goal so that workers can get more money for idleness. 
Essentially this was an attempt to create new and powerful economic 
incentives for American industry, so that the cost of dislocation, unem¬ 
ployment, and these other economic costs would bear more heavily 
upon their shoulders and they would have greater incentive to work 
out a solution to these problems. 

As the idea of the guaranteed annual wage is accepted in broader 
and broader sections of American industry, there will be these power¬ 
ful economic incentives. Industry under the impact of these incen¬ 
tives will begin to act more responsibly in terms of the community 
problems, in terms of the problems of relocating and retraining 
workers. 

In the field of population growth there is a real problem. Here, 
again, you cannot minimize it. According to the experts, our popula¬ 
tion will grow from around 165 million to 190 million within 10 years. 

When you add the increase in the population, roughly 700,000 new 
workers coming into the labor force every year at the present time—a 
figure which obviously will grow—and you add to that the increase in 
productivity because of the new tools, you get a situation where we 
need now roughly 3 million new jobs a year, just to keep pace with 
the development in productivity and the increase in the labor force. 

Within 5 years we will need roughly 4 million new jobs a year. 

I say we have a right to ask ourselves, in the face of this problem, in 
the face of the increase in productivity, in the face of the increase in 
the labor supply: How well are we doing? 

Well, we are not doing as well as we need to do, although we have 
made some improvement since 1954. We still haven’t solved this basic 
problem. 

In 1953, in September, there were 17.5 million workers engaged in 
the manufacturing industries. 


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In September 1955, there were only 16.9 million so employed, or 
600,000 fewer workers. 

Although 600,000 fewer workers were employed in the manufactur¬ 
ing industries in September of 1955 as compared to September of 1953, 
the production of those industries has gone up so we have greater 
production, with fewer workers. We have got to recognize that this 
problem will become intensified in the period ahead. 

Those people who don’t want to recognize this as a problem say the 
figures are true. They will say that the automobile workers and 
automated engine plants are turning out more engine blocks with fewer 
workers, but they say that is only part of the story. There are more 
workers engaged now in making the automated machinery that makes 
the engine block, and the difference is absorbed there. 

Well, I say that the sheer logic of the situation disputes that fact, 
because the Ford Motor Co. and General Motors Corp. don’t spend 
billions of dollars to automate and modernize their factories just 
because they want to minimize direct labor costs and increase indirect 
labor costs. There is a net saving, and they are spending billions to 
modernize in order to reap that saving. 

The Department of Labor recently put out a statement which I 
think bears upon this point. Their statement reads as follows, and I 
quote: 

Electronics Output 

The electronics industry is one of the key industries in this whole automation 
process. 

The electronics output in 1952 was 275 percent higher than in 1947, but was 
produced by only 40 percent more workers. 

Here is an example, you see. 

In other words, they are automating the automation factories. 
They are automating the factories that make the machinery to auto¬ 
mate the production of engines. General Mills is a company that has 
done a great deal in this field because they got in this business in the 
food processing and packaging industry. They produce a great deal 
of machinery that goes into what we call the automated technical 
process. And they have done a great deal toward building what they 
call the Autofad, which is the automating of the technical process of 
building automation equipment. That sort of thing is going to de¬ 
velop very fast. You are going to find the automating machine indus¬ 
try that makes the machinery that the auto industry uses, the electri¬ 
cal industry uses, is going to be highly automated itself. They are 
going to turn out a larger volume of machinery, with fewer and fewer 
workers involved. 

Now, we would like to suggest and recommend that in order to meet 
this challenging problem—greater productivity, higher labor force— 
we need to be working constantly at the problem of maintaining a 
dynamic expanding balance between greater productive power and 
greater purchasing power. 

We believe that one of the things that needs doing is to give con¬ 
sideration to lowering the retirement age from 65 to a lower age, so 
that people can be retired earlier and can enjoy a longer period of re¬ 
tirement, where they can have high standards of economic security and 
a measure of human dignity. 


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This means that we have got to put effort on the privately negoti¬ 
ated pensions plans and on social security through appropriate legis¬ 
lation. 

We need also to cut down on the size of the labor force, not only 
by earlier retirement but by extended. educational opportunities, so 
that people, since they will require greater technical skill, will be in 
school longer, and in that way we will shorten the labor force in 
terms of age groups, at the low end and at the high end, making full 
use of those people who come between those two age groups. 

But the problem will not just be met by these things alone. We 
obviously are going to fight for higher wages, and we need to fight for 
lower prices. I think that basically we have got to recognize that 
our problem is the imbalance between production and distribution. 

The chairman of this subcommittee certainly knows the problems 
the farmers are having. Their problem is not production; their prob¬ 
lem is distribution. That has been our basic problem all these years. 
The farmers of America are not getting their share, their fair share, 
of the national economic wealth that is being produced. They have 
done a tremendous job producing the foods and fibers that we need 
as a free people, and yet their problem is that we haven’t learned to 
distribute the products of our farms. 

We in the labor movement are working on that. We know that we 
are the best customers of the farmers and we know that they are the 
best customers for the things we make, and we know that we can’t 
be prosperous unless they are prosperous. We don’t think that they 
can be prosperous unless we are prosperous. We know that they lost 
their farms in the dark days following 1929 because millions of factory 
workers had lost their jobs, and we know that their economic well¬ 
being is inseparably tied together with our economic well-being. So 
when we fight for higher wages, we are fighting for more purchasing 
power, more purchasing power to buy the things the farmers raise, 
more purchasing power to buy the things that we make in the way of 
consumer goods. We know that when a farmer has more purchasing 
power, he buys more clothing, he buys more equipment, he buys more 
of the things that we make in the factories in which our workers 
are employed. 

One of the things that bothers us and one of the things that we 
have got to get into as a part of this whole problem of automation 
is the question: “What share of the economy is made possible by 
automation; what share of the reduction in unit cost of production 
is made possible by automation; what share of the reduction in cost 
are the consumers entitled to in the way of a reduction in prices?” 

Unfortunately, we are making no progress in that direction, com¬ 
pared to what ought to be done. 

- Recently, the steel workers got a wage increase, and the steel 
industry, as has been the case in the past 20 years, increased prices. 
Every time the industry gives the workers 50 cents more in wages it 
jacks up the price of steel $1, and then attempts to make the workers 
responsible for the price increase. 

The profits of the steel industry were sufficiently high to absorb 
the wage increase without any price increase. 

I think that Congress ought to begin to check into this whole ques¬ 
tion of the wage-pnce-profit relationship, and find out who is respon- 


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sible for the price increases; find out whether the lust for greater and 
greater profits is not really the reason why prices were jacked up, 
not because the wage increases required higher prices. 

Take the auto industry. Chrysler and Ford have both raised their 
prices. They needn’t raise their prices. We haven’t got the final 
figures on the profits of the Fort Motor Co. because it is a family- 
owned corporation, not one that you can get all the figures on, but 
we know that they are proportionately doing almost as well as General 
Motors, and we do know how well General Motors is doing. 

The General Motors Corp., in the second quarter of this year, made 
a profit of $734 million, in 3 months. They haven’t come out with 
their new models yet, but I suppose when they do, they will follow 
Chrysler and Ford in their price adjustments, but they needn’t. 
There is no reason why the efficiency of automation cannot be shared 
by the American consumers. These corporations need not pass on the 
wage increase in the form of higher prices. 

General Motors could pay the wage increase and cut the price of 
their cars, and still make fantastic profits. We believe and we have 
been urging Congress to investigate this thing so that all the facts 
could be placed on the table. The economic and moral responsibility 
for higher prices then could be pinned on the back of that economic 
group that is responsible. 

If labor is responsible, and the economic facts show that, then we 
should be held responsible. 

But if the lust for higher profits is the area of responsibility, then 
the people who are responsible for that drive for greater profits ought 
to be accountable to the Ajnerican people. 

The Secretary of Agriculture made a speech down in New Orleans 
some weeks ago, and he said, “It is just terrible how the farmers are 
getting further and further out of line in terms of their economic 
position,” and I agree with that. Their economic position continues 
to deteriorate. The things that they have to buy are going up in 
prices, but the things they sell are going down. 

Then the Secretary of Agriculture went on to say—and this is a 
part of a well-thought-through political campaign of propaganda— 
that, “Of course prices had to go up, because the workers got a Wage 
increase.” And I invited Mr. Benson to join the efforts oi my union, 
the auto workers, to try to get a congressional investigation to find 
out what the facts are. 

Well, to date Mr. Benson has chosen not to join forces, because 
he well knows, as we know, that the culprit is not higher wages but 
the culprit is the drive for higher profits on the part of big business in 
America. 

We hope that somehow Congress will get around to checking into 
this whole question of wages, prices, and profits, because this bears 
directly upon the whole question of the sound use of the efficiencies and 
economies of automation. 

Who gets the benefits? If the consumer shares in the benefits 
through lower prices, if workers share by higher wages and greater 
purchasing power, then we are dealing with the basic facts of keeping 
in balance greater productive power and greater purchasing power. 

The thing we have got to realize is that the minute we get out of 
balance all of the forces that made for the first imbalance begin to 
compound the imbalance and build on it very quickly. 


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That is why in 1954 we were in trouble in the auto industry. The 
auto industry was the single most important industry that had stimu¬ 
lated demand and purchasing power; the minue we began to get in 
trouble the whole economy began to get in trouble. If we don’t make 
automobiles, they don’t make steel, rubber, and the thing backs up. 

In Michigan alone unemployment in 1954 cost the wage earners in 
the manufacturing industry alone $640 million loss in wages. Noth¬ 
ing breeds unemployment like unemployment because, when a worker 
is unemployed, he curtails his consumption and then the things that 
he would hare bought that somebody else made are not purchased 
and the fellow who would have made them gets laid off. This thing 
begins to compound; it begins to snowball. 

Therefore, what we need to do is to find a way to build into our 
economic system adequate cushions and safeguards to prevent the 
compounding of the negative economic forces that make for im¬ 
balance to begin with. Therefore, we believe that unemployment in¬ 
surance needs to be raised to realistic levels, to begin to meet the basic 
needs of workers during periods of layoff, so that we don’t withdraw 
them from the active field of consumption, but sustain their con¬ 
sumption at high levels, so that this compounding of negative impact 
is held down if not entirely prevented. 

We need to raise the level of the minimum wage. 

Congress made some progress to a dollar, but a dollar an hour meas¬ 
ured by the technology that we are now dealing with is unrealistic. 
It is inadequate. We believe that it ought to be raised to $1.25 as 
the next step in the right direction. 

We need also, Mr. Chairman, in human terms and as part of the 
long-range program to harness the power and the productive capacity 
of automation, a realistic program of school construction. We need 
600,000 new schoolrooms right today. And with the growth in our 
population, we will need many more in the years ahead. 

Here is a job for America to which we need to apply our technology 
and our economic resources. 

In the field of housing, we need to build 2 million new units every 
year, to wipe out the slums and to accommodate the growth in our 
population. 

We need 800,000 new hospital beds right now. We need all of the 
other medical facilities, both on a training end and on the service 
end, to meet our basic needs. 

We have need for a tremendous highway construction program; 
and parking lots. It is not enough just to build new roads because* 
after you get to where you are going, you have to have a place to 
park your car. We have a tremendous problem there. 

We have the whole problem of flood control. Look at New Eng¬ 
land now. Twice within a couple of months, New England has been 
struck hard by floods. And, of course, we have the broad resource 
development program that we have got to work on continually. 

If we take on all these programs—school construction, housing 
construction, hospitals ? roads, flood control, resource development* 
we believe we can maintain full employment and full production. 
But when we get to the point where we begin to meet these basic needs, 
then we need to think in terms of a shorter workweek. As the tools 
of production make it possible to satisfy our basic economic and ma¬ 
terial needs with fewer and fewer hours of work, we need to be think- 


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ing in terms of a 35-hour week, a 30-hour week, a 4-day week, which 
I prefer to a 6-hour day. I would prefer to work 8 hours a day, 

f ;et your time in, and get away from the factory, so you can go away 
or a weekend for 3 days with your family. 

This will mean not only greater leisure, but the development of 
whole new industries to meet the needs of people who are spending 
their leisure on a wholesome, constructive basis. These things wifi 
not just automatically take place. We have got to be thinking in 
terms of these long-range problems. 

We believe also that small business is going to need a great deal 
of help during the transition period. We believe, further, that we 
need to reevaluate our historic antimonopoly policy, because more 
than just the size of industry is involved in whether it is monopolistic 
or not. Questions of broad social policy enter into this thing. 

I believe we need to think through and reevaluate the whole concept 
of how a free society deals with the problems of monopoly and how we 
protect the free enterprise characteristics of our economy in a period 
of automation. 

We would like to suggest that your committee, or some other appro¬ 
priate committee of Congress, continue a study of the problem of 
automation. One of the real needs is to provide some appropriate 
clearinghouse through which you can channel the total information 
on the problem of automation. 

I believe that the General Motor Corp., or the Ford Motor Co., has 
a very good idea of what automation is going to hold 10 years from 
now, or 15 years from now, as it applies to the automotive industry. 
I think GE and Westinghouse have a very good concept of what auto¬ 
mation is going to do to their industry. But General Motors doesn’t 
know the electrical industry and the electrical industry doesn’t know 
the automotive industry, and neither does the chemical industry know 
some other basic industry. There is no central clearinghouse through 
which the total information can be channeled so that tne Government 
and the people of our great country can have a look at the total picture. 
It seems to me that an appropriate continuing study committee of 
Congress can provide the clearinghouse through which we can main¬ 
tain an up-to-date inventory of the developing information and knowl¬ 
edge in tne field of automation and related technologies. Therefore, 
we would like to urge, that you give consideration to a continuing 
study committee that periodically will bring up to date the inventory 
of the information ana the knowledge and the problems that automa¬ 
tion is developing and presenting to us as a free people. 

It is in the areas I have mentioned that we would like to have your 
committee continue to give study. We should get more light and less 
heat on the problem. Industry should not go out to try to make it 
appear that labor is raising all sorts of unnecessary fears, and begin 
to put the tag that was applied to us some years ago, that we were the 
fearmongers; nor should labor go out and attempt to exaggerate the 
problems in order to create a situation in which they can exploit the 
fear. What we need to do is to look at it honestly and realistically and 
realize that free labor and free industry, free agriculture, and free 
government have all got to work together to find me common answers 
to these common problems. 

Personally, I believe that we can find the answers. I have unlimi ted 
faith in the future of the American economy. I have unlimited faith 


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in the good sense of the American people, and I believe that somehow 
we will find the answer to this problem, but we will find the answers ; 
only if we understand the problems and work at solving them. 

That is why we have come here today, to urge that we work at this 1 
problem with honesty, and with realism, and with an understanding 
that we are all in the same boat, whether we are from labor or industry 
or agriculture, or some other segment of the American economy, and 
that somehow we need to find the answers to these problems. 

We believe that the possibilities for human progress and for tech¬ 
nological development are as unlimited as the general use, the creative 
general use of the free human spirit. There is just no limit to where 
this thing can go. What we need to do is to recognize that the horizons 
are unlimited m the field of scientific and technical development and 
what we need to do is to work to develop both the know-why and the 
know-how in the human and social sciences, in the art of translating 
the great technical progress into human values, into human progress. 
Only as we do that can we meet this great challenge. 

I think we can, and I hope that the committee hearings that you are 
holding here will afford labor and industry and other people an 
opportunity to come here, express their point of view, and out of this 
information and knowledge, you can make recommendations that can 
help to guide people in industry and labor, and that can be recom¬ 
mendations upon which positive legislative action may be taken. 

I appreciate the opportunity to testify, Mr. Chairman, and if there 
are any questions I will be glad to try to answer them. 

The Chairman. Thank you very much, Mr. Reuther. 

I recognize this problem as one of our greatest and most difficult 
problems right now. For that reason I am going to listen attentively 
to every witness who comes before this committee. I know that other 
members, although they cannot be here in person for reasons that are 
good and sufficient, will study this testimony. The testimony, of 
course, will be made available to the House and Senate for their con¬ 
sideration, because as you say, we must consider it now and have 
vision to look into the future. 

You mentioned the New England floods. Would it be feasible to 
have an authority up there similar to the one they have in the TVA, 
that would correct the troubles that they have ? 

Mr. Reuther. Well, I have always been very pro-Tennessee Valley 
Authority because I believe that a river has to be looked at as a total, 
and a local community, or a State or a group of States through which 
a river goes cannot by themselves deal with the problems of that total 
valley. An authority in terms of the total river valley is a much more 
realistic and effective approach to the problem. I would certainly 
feel that the lessons of the TVA could be applied in many respects 
to the problems of the New England areas. 

The Chairman. Do you know what consideration is being given to 
working out something along that line ? 

Mr. Reuther. There have been some discussions up there in which 
we have participated. I am not familiar with the details. I know 
there are some discussions about the power problem of New England 
and other problems relating to the river developments. 

The Chairman. I appreciate what you said about the farmers. I 
agree with you, that labor has a problem in common with the farmer, 


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=and‘ the farmer has problems in common with the worker. I 
thoroughly agree with what you say on that. 

As to high profits, I see another evil. I wonder if you have given 
consideration to it. If the large concerns are able to get their ex¬ 
pansion capital from higher profits and retained earnings, that denies 
the saver or an opportunity of investing his funds at a profit. In other 
'words, there will be no demand, or not as much demand for equity 
capital. Have you given consideration to that factor, too ? 

Mr. Reuther. We have discussed that on a number of occasions. 
What is happening is that American industry is making tremendous 
profits, and the plowing of those undistributed profits into expansion 
and improvement instead of to the stockholders is, I think, changing 
the character of American capitalism. It is an old theory when you 
wanted to build a new factory you went out and sold stock or borrowed 
money and people invested in the factory by buying your stock or your 
bonds. That is being changed a great deal, because much of the ex¬ 
pansion now is being financed by plowing into expansioh the earnings 
of an industry. 

The Chairman. Over and above fair profits. 

Mr. Reuther. Over and above a fair profit. 

The Chairman. Which is really costless capital. 

Mr. Reuther. In a sense, that is exactly what it is. 

The Chairman. What chance does a small concern have, in distri¬ 
bution or manufacturing, when the young operators go into the market 
and they borrow their money and have to pay interest on that money? 
What cnance will they have in competition with a factory unit across 
the street that has been built with costless capital? 

Mr. Reuther. You can understand why small business is in trouble 
for precisely that and for many other reasons. It is very nice to say 
that under our free enterprise system anybody who has an idea for a 
new mousetrap or new automobile can go out in the market and raise 
capital and start himself a business, but I would warn anyone who is 
.going to take on General Motors or Ford that it is pretty risky busi¬ 
ness ; that the prospects of survival are not too great because you are 
up against powerful corporations whose volume makes it possible to 
reduce the uhit cost of production very low, and whose profits are tre¬ 
mendous. Let me get back to this General Motors profit figure. 

They could have paid us, for example, in the second quarter of 
1955—they could have absorbed the total cost of our economic package, 
wage increase, GAW, higher pension benefits, improved medical care 
ana all of the other things—the total cost of that could have been ab¬ 
sorbed by the General Motors Corp., and the impact upon their profit 
position would have reduced their profit from 42 percent return after 
taxes on their net worth to 39 percent return on their net worth, and 
how a company like that can wind up by charging higher prices for 
their products is beyond me to understand. 

The Chairman. 42 percent in less than a 2Vfc-year period. 

Mr. Reuther. That is right. At the end of 2 y 2 years you own it— 
you get it back in dividends but still own it. It is not true there is not 
a Santa Claus, because there must obviously be one. 

The Chairman. You said over $700 million in one quarter. What 
is the exact figure ? 

Mr. Reuther. $734 million. 


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The Chairman. Does that mean nearly $3 billion for the year, then ? 

Mr. Reuther. If they sustain that rate for four quarters, it would 
mean that much. Of course, they won't because they will have a cer¬ 
tain model change period, etc. 

The Chairman. That is what you consider the 42-percent profit? 

Mr. Reuther. That is right. In the third quarter they earned 42 
percent after taxes—42 percent after taxes—42 percent on their net 
worth, at an annual rate. If you projected that, if they earned for a 
year what they earned in the second quarter, they would have earned 
at an annual rate of 42 percent profit on their investment, after taxes. 

The Chairman. The farmer, of course, as you mentioned, has a 
problem in distribution. You know the little farmer is being squeezed 
out entirely, in somewhat the same way as are the older workers. 

More and more they are turned off and they go out and they receive 
this unemployment pay a while. They go back. They can’t get back 
on, because their age is against them. It used to be in our country, in 
farming areas, they could at least turn to farming. It was a good 
cushion, a backlog. Now they can’t get an allotment to grow. The 
big planters, of course, are profiting mighty well. 

I don’t have any prejudice against large planters, or big business, 
or anything else. They all fit into our scheme of things, but we have 
got to give some consideration, I think, Mr. Reuther, to the distribu¬ 
tion of opportunities among farmers, as well as distribution of their 
products. 

Mr. Reuther. I agree with you cQmpletely and I want to say this, 
that you get legislation introduced in this Congress to help the farm¬ 
ers who farm the land, and you will find the CIO and the entire labor 
movement down here supporting that legislation. One of the things 
that bothers us is that too often farm programs help the farmers who 
farm the farmers and not the farmers who farm the land. We think 
the family-sized farmer is the fellow who needs the protection, and 
if legislation is introduced to give them that kind of protection, you 
will find the American labor movement down here supporting it 
wholeheartedly. 

The Chairman. I think we will need a program like that to help 
the family-type farmer, and I have heard your statement and I am 
very much heartened to know we would have the support of a great 
organization like your own. 

The agriculturalist, of course, is the fellow who farms the farmer, 
and the agriculturalist is the person that is making a lot of money out 
of this program. I think we had better take another look at it. 

Concerning the retirement age, you didn’t make a suggestion as to 
what that age should be. Do you have in mind any age that the re¬ 
tirement age should be changed to ? 

Mr. Reuther. I think as the first step it ought to be brought down 
to 60. 

The Chairman. What about the women? 

Mr. Reuther. It depends upon the type of industry they are in. I 
think if you could go on the basis of a general reduction to 60 and 
then where people were in heavy industries, where the strain is much 
greater, you might consider a special earlier retirement period. I 
think an overall reduction to 60 would be the first step in the right 
-direction. 


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The Chairman. Now when a person, say, 45 or 50 years of age, at¬ 
tempts to get a job, to do any kind of wore—he is told that he is too 
old, that the insurance company will not take him. That is given as 
the reason why they will not give him a job. Is that the only reason 
they are refusing to take them, because they can’t be covered by 
insurance? 

Mr. Reuther. That may be a reason in some cases. It is not a good 
reason, because obviously, if industry wanted to get these people cov¬ 
ered by insurance, they could. 

The Chairman. They could, however, get these older workers cov¬ 
ered somehow ? 

Mr. Reuther. Yes, sir. 

The Chairman. Could that be handled by law someway so as to 
prevent discrimination against these older workers ? Have you given 
consideration to the kind of legislation if any, which would be helpful 
in that direction? 

Mr. Reuther. We have not discussed meeting that problem by leg¬ 
islation. We have been appealing to the employers, however, to be 
willing to employ workers who have been displaced, despite their age. 
Some progress has been made in a number of areas but I think, by and 
large, most industries still refuse to hire workers after they have 
passed 45 years of age. They prefer a young fellow. 

There was some claim that the pension programs had discouraged 
hiring older workers, but that is not true, because if you hire a worker 
at 45, that doesn’t cost the employer, under our pension plans, any 
more than if you hire a worker at 25, because he merely has to build 
up future service credits at a certain rate, based upon the wage of that 
worker. But a lot of these things have been raised as excuses to j ustif y 
the refusal on the part of management to employ workers beyond 45 
years of age. 

We believe that when a worker is displaced, if he is 45 or 50 years of 
age, he ought to be employed, based upon his ability to do the job, 
without regard to his age. 

As far as the union is concerned, there are no obstacles that we have 
put in the way that prevent an employer doing just that. 

The Chairman. You think then that they are giving excuses rather 
than reasons for not employing these people? 

Mr. Reuther. I do. 

The Chairman. You mentioned awhile ago about a plant doubling 
its capacity with 10 percent of the workers. Would you elaborate 
on that a little bit more, to tell us about the number of workers before 
and the number of workers after? 

Mr. Reuther. Well, I was quoting from Newsweek because I said 
that at that point that it might be. more convincing to do that than 
to give you figures from labor sources. I can get you the citation on 
that. 

The Chairman. Yes, sir; that is all right. That is not too im¬ 
portant. 

Mr. Reuther. The auto workers have put out a pamphlet on auto¬ 
mation which we would be happy to supply. 

The Chairman. Thank you, sir. We will be glad to have it. In 
fact, I have seen one. 


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(Mr. Reuther subsequently submitted the following section on 
automation taken from a report to the UAW-CIO Economic and 
Collective Bargaining Conference, November 12,1954:) 

The dictionary as yet does not contain a definition of “automation,” but already 
it is making striking changes in our industrial system. Some management 
spokesmen say automation is “the automatic handling of parts between progres¬ 
sive production processes”; others claim it is “a new philosophy of design, a new 
manufacturing method.” Regardless of definition, however, technological develop¬ 
ments involving the greater use of automatic machinery and the automatic regu¬ 
lation and control of this machinery are giving rise to radical changes in the 
factory. These changes, sporadic at the outset, are now constantly increasing 
in velocity and volume. The Republican tax bill changing the basis for the 
calculation of depreciation may tend to accelerate the scrapping of existing plant 
and machinery and their replacement with new and more efficient equipment 
and facilities. The manager of the new Ford foundry in Cleveland gave a 
graphic idea of the kind of changes which are taking place when he stated: 

“Ours is the only foundry in the world where the molding sand used to make 
castings is never touched by human hands except maybe out of curiosity.” 

Automation may be the forerunner of a second industrial revolution which 
will have a greater impact throughout the world than the first. Or technological 
developments may come more slowly and gradually without causing major 
changes in economic and political institutions and relations. The experts dis¬ 
agree on what the future holds. One says automation is only “a new chapter in 
the continuing story of man’s organization and mechanization of the forces of 
nature.” Another says that automation “will produce an unemployment situa¬ 
tion, in comparison with which * * * the depression of the thirties will seem a 
pleasant joke.” 

A third, who believes that the new electronic computers will be linked with 
automatic machinery to produce robot machines, believes that “we should set up 
a Robot Machine Commission, with the duty of formulating social policy on the 
speed and circumstances of the introduction of robot machinery antrwith power 
to speed up or delay its introduction according to what the public welfare 
demanded.” 

Already there are examples where relatively few men do the work which form¬ 
erly was done by many. According to Newsweek: “Ford’s automatic engine plant 
turns out twice as many engines as an old-style plant, with one-tenth the 

manpower.” 1 . 

Approximately 10,000 men in the foundry and engine divisions of a major 
auto company now turn out the same production which formerly required more 
than 23,000 men. Only a large increase in total output prevented wide-scale 
lavoffs in those divisions. 

These developments are not confined to the industries with which the UAW 
bargains but extend throughout the economy. Newspaper articles revealed that 
“a radio assembly line geared to produce 1,000 radios a day, with only 2 workers 
needed to run the line [is replacing] standard hand assembly [which] requires 
a labor force of 200.” 

Automatic controls have been widely introduced in the petroleum industry. 
One industry spokesman stated: “The average refinery which would employ 800 
people without instrumentation would employ 12 people, were instrumentation 
utilized to the fullest extent possible.” 

A prominent Harvard economist has stated that it would take approximately 
$600 million to provide the necessary controls and instruments to automate all 
the plants built in 1950. During that year about one-tenth that sum was spent 
for that purpose. One indicator of the rate of adoption of automation is the 
output of the “industrial recording and controlling instruments” industry. In 
1951, according to this same economist, the sales of these instruments doubled. 
And, if the upward trend in expenditures to automate industrial facilities con- 


1 “Certainly anyone who is worried about the effect of machines on employment can find 
examples to bolster his fears. When the Bell System installed automatic long-distance 
dialing in Boston a few years ago, a newspaper report pointed to the ‘one bitter note 
seeping out from the proud new telephone building and its wondrous insides’—450 toll 
operators received their termination notices. Ford’s automatic engine plant turns out 
twice as many engines as an old-style plant, with one-tenth the manpower. It’s been 
estimated that, in an office, 1 machine could do the work of 200 to 500 clerks.”—Robot 
Machines and Men : Is a New Age in the Making? Platform, October 1953, p. 19, published 
by Newsweek Club and Educational Bureaus, 152 West 42d St.. New York 36. N. Y. 


45006 O—59- 


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tinues, American industry may be fully automated within a decade. This, ac¬ 
cording to another economist, will mean that 1 man will do at least the work 
now done by 5 men. These predictions, if accurate, would mean, for example, 
that 200,000 men could match the present output of the million UAW members in 
the automobile industry. 

The possibility of dramatic technological advances emphasizes the need for an 
expanding economy built upon the broadest possible purchasing power base. 
Automation will increase productivity, but increased productivity without in¬ 
creased total production is a formula for depression. If productivity is increased 
within a framework of full production and full employment, the Nation will 
prosper. If automation is irresponsibly introduced and exploited, it will bring 
unemployment and misery instead of security and abundance. The radical pro¬ 
ductivity increases which will accompany automation make it necessary to in¬ 
tensify the fight for an economy based on full production and full employment. 

The key to success In this struggle is increased purchasing power in the 
hands of the people. We must be able to purchase the goods we produce. And, 
when our productive power increases, our buying power must also increase. 
The UAW-CIO will make its contribution toward this end by insisting at the 
bargaining table that purchasing power be increased sufficiently to match our 
productive capacity. But high hourly rates of pay for our members are not 
enough. Steady work is essential week by week, month by month, the year 
around. 

The Chairman. On this relocation problem that you mention, I 
consider that very serious problem. Do you have any suggestion to 
offer as to the type legislation that would be helpful, if you believe 
legislation would be helpful? 

Mr. Reuther. Well, rather than just discussing it off the cuff, I 
would prefer if we sat down and worked out a more comprehensive 
plan, because there are many aspects of this problem that need to be 
met. I think the experience in some of the New England textile com¬ 
munities would give you the basis for trying to meet the problem. 

As I said before, I think the Government has an overriding respon¬ 
sibility. I think the employer has a responsibility. I think that if 
they both meet their responsibility, the problem by and large can be 
met satisfactorily. 

The Chairman. You mentioned a scholarship program. I gather 
from what you say that you are in favor of Federal aid to education. 
You believe education is a national, rather than a local problem ? 

Mr. Reuther. Yes; I do not believe that the tax structure of the 
average city or county or State is adequate to meet the present-day 
educational needs. I believe that since the Federal Government has 
greater taxing capacity than do these local governments, it must 
assume increasing responsibility in the field of education. Therefore, 
we have urged Federal aid to education for a number of years. 

We do not believe that the deficit, which is a very serious one, can 
be overcome, unless the Federal Government does greatly step up the 
aid which it provides to local school groups. 

The Chairman. We were denied the privilege of using a lot of 
youngmen in World War II and subsequent to that time because of the 
lack of education. 

Mr. Reuther. That is right. 

The Chairman. To that extent it would be a national problem? 

Mr. Reuther. I think it is one of the great tragedies. I think 
America should be ashamed of what we are doing in the way of edu¬ 
cational opportunities. We spent, in 1 week of the last war more than 
we spend in a whole year for education in America. 


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I say there is something wrong with moral fiber and standards when 
we are not willing and able to spend as much per year for the education 
of our young people as we were willing and able to spend under the 
compulsion of war. There is just something wrong. You can get 
appropriations through Congress without too much difficulty to make 
super H-bombs or battleships, or super jet planes—nobody says we 
cannot afford it. This is a necessity. We are defending ourselves. 
They just give you all the money we need. But when you talk about 
better schools, better housing, better medical care, more liberal social 
security, and these other things people say. “We cannot afford .these 
things.” But we can afford them. 

One thing that we cannot afford is to continue neglecting the educa¬ 
tional opportunity of our children because down the road future gen¬ 
erations are going to pay a tragic price for that. 

The Chairman. If you place the burden entirely on the local com¬ 
munities, where a lot of people would like to place it, the local com¬ 
munities will have to go into debt. They will have to issue bonds. 
All bonds of .the States, counties, cities, political subdivisions, are tax- 
exempt bonds. That sets up another private group in our country 
who pay no taxes whatsoever. Income from those Bonds are exempt 
from taxation, whereas the Federal Government securities, if you 
were to raise the money that way, as you suggested, would certainly 
be taxable. 

Now as to the full employment act of 1946—I believe I have heard 
you say that you are in accord with the objectives of that act. Do you 
think it has been working satisfactorily and has been helpful to the 
country ? 

Mr. Reuther. I think that we got in trouble in 1954 because we 
weren’t vigorously applying that act. We were just relying upon the 
free market place, ana there are times when the free market place is 
not adequate to assure that we will continue to have full employment 
and production. We have always been in favor of trying to make 
the Employment Act of 1946 more effective, by building into it more 
effective machinery for implementation. Of course, in addition to 
having machinery, also you have to have the will to use it, and that 
essentially is an administrative decision and not a matter of the act 
of Congress. Congress can write the law, but the law has to be ad¬ 
ministered by the executive branch of Government. Unfortunately, 
I think there was a lack of will on the part of the administration back 
at the latter part of 1953 to use even the inadequate tools that are pro¬ 
vided for in the 1946 Employment Act. 

We kept urging them to use it, and it was only after things got much 
worse that they even began to do a litte bit. We are in favor of a 
better law, but we also know that the spirit and intent with which the 
law is administered are critical. 

The Chairman. In other words, a good law can be a bad law if it 
is poorly administered, and a bad law can be made a pretty good law if 
it is properly administered ? 

Mr. Reuther. If I had to choose between a weak law administered 
vigorously or a strong law administered weakly, I would take the 
weaker law with strong administration. 

The Chairman. The administrator has much to do with it, of 
■course. 


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Mr. Reuther. That is right. 

The Chairman. The purchasing power question which you raised 
is very important. I was here when we had the hard times that you 
were speaking of a while ago, from 1929 through the thirties, and I 
felt that the problem then was not overproduction but just under¬ 
consumption, oecause of a lack of purchasing power. People just 
didn’t have the money. If we had had some way to distribute the 
money I think we would have brought this country out of depression 
rather quickly and rapidly. 

Do you recall that was*the reason I advocated paying the soldiers 
a bonus from the First World War? That would have distributed 
about $3 billion to about 3i/ 2 million men. I feel now that a lot of 
the Members of Congres will agree that if we had paid that money 
it would have started our country back on the road to recovery. Pur¬ 
chasing power is what was needed at that time. We have got to keep 
in mind at all times, as you say, gearing it to the needs of our economy, 
so that we will have greater and greater production, at the same time 
greater purchasing power, balanced with that production. Otherwise, 
we would be out of balance again. I think your analysis of it is a 
sound one. I hope we can carry it out that way. 

Have you made a statement on installment buying ? 

Mr. Reuther. Not recently. 

The Chairman. There is an effort being made now to dampen and 
retard installment buying. 

Mr. Reuther. There is no question about it, installment credit is 
being expanded very rapidly, and that we could get in trouble down 
the roaa if we ba9e future prosperity only upon the expansion of 
consumer credit. That is why higher wages are important. That 
is why the tax law that you people are going to have to pass this 
coming session of Congress is very important. If Congress gives the 
tax relief to the big corporations, and the wealthy income groups, 
then obviously that is not going to get more purchasing power into 
the economic stream. If you do as we hope you will, raise the per¬ 
sonal exemptions from $600 to $800, you will be putting $4% billion 
of high velocity purchasing power into the economic stream by giving 
the low- and middle-income families that much more purchasing pow¬ 
er. It is that sort of thing that must be done to offset the continued ex¬ 
pansion of consumer credit. If people hsfcre tax reductions so that they 
can spend more of the money now that is going to taxes for consumer 
goods, if they get higher wages, greater income, of course, they will 
not have to borrow future earnings in order to sustain their levels 
of living at the present time. 

What you do on the tax front will be very important as it relates 
to this problem of the expansion of consumer credit. 

The Chairman. You made a statement about the number of new 
workers ever}’ year that we must provide for. I believe you said 
about 3 million a year, this year or next, and in 5 years about 4 million 
a year. Do you believe that an increase or expansion of our gross 
national product, say, 3 or 4 percent a year, would be sufficient to 
take care of that ? 

Mr. Reuther. It will not. 

The Chairman. What do you estimate it will take? 


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Mr. Reuther. I think it will take a minimum in the next several 
years of 5 percent and beyond that it will have to step up to 6 and 7 
percent. 

The Chairman. Where do you anticipate this will finally balance 
and level off? 

Mr. Reuther. It will never level off. The rate of growth may 
taper off, but it will never level off, because the very nature of our 
kind of dynamic economy requires continuous growth. I just think 
you cannot put a ceiling on the growth, either, in terms of the overall 
expansion of the American economy or the measure of increased 
productivity. We have had this discussion in the automotive indus¬ 
try because originally they claimed that the average overall increase 
in productivity was 2 percent. When we worked out our first wage 
agreement that gave the worker a claim to a share in increased 
productivity, we worked out what we called our annual improvement 
iactor. It was based upon 2 percent a year. Now it is up to 2 y 2 
percent. We know the true figure is more than 3 percent. It is 
much more than industry is willing to agree because the minute they 
say it is as high as it is they know that we will be back at the bargain¬ 
ing table using their figures to support our arguments. They keep 
underestimating the level of increased productivity. 

I personally think that it is somewhere around 41^ to 5 percent, 
as a conservative figure, and it will continue to rise as we improve 
our technological processes. 

The Chairman. That being true, we will have to increase our 
debts. Under our capitalistic system, which is the finest system in 
the world, I think, supported by the finest commercial banking sys¬ 
tem, we must increase debts in order to expand our economy, because 
purchasing power is based on debt. 

Don’t you think it will be more helpful for that debt to be in¬ 
creased, if necessary, through sound installment buying, since in 
that way people can get needed comforts and the necessities of life? 
If you have got to have debt anyway, why not installment debt rather 
than add to the national, or Federal debt? Then if there is danger 
of inflation, instead of stopping the fellow who is buying something 
he needs, why not pay off some of the national debt so as to reduce 
the aggregate debt and keep the country in balance? Have you 
given any consideration to that, Mr. Reuther ? 

Mr. Reuther. Generally, our attitude concerning the question of 
debt has been that the size of the debt is not an absolute thing. It is 
a relative thing. You have got to measure the debt of an individual, 
or of a nation, based upon the level of their economy, and the effi¬ 
ciencies of their tools of production. We have never been greatly dis¬ 
turbed by the size of the national debt because when you measure 
it by the national income, and the productivity of our expanding econ¬ 
omy, the size of the governmental debt is not very great. It is con¬ 
venient around election time to beat it like a dead horse, but the fact 
is that it is not a very large debt, compared to the wealth that we 
collect each year in our national economy, and when measured against 
the possibilities of even greater wealth in the future. 

The same thing is true of an individual. A debt on the part of an 
individual has got to be measured by the earnings of that individual. 
If the debt gets far out of proportion to the earnings of that individual, 
then it can be troublesome. The consumer debt doesn’t get serious 


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until you develop a little unemployment, because at that point a 
worker’s income in curtailed, and his debt compared with his curtailed 
income then is no longer manageable; he cannot meet payments; he 
is foreclosed, and then you get a compounding of the negative economic 
factors that I was talking about. 

That is all the more reason why, at the point we get some temporary 
unemployment—and nobody thinks that in a free economy you can 
always have a continuous line: there are going to be fluctuations,, 
temporary unemployment—we should have adequate cushions supplied 
either by the UAW contracts or adequate unemployment compensa¬ 
tion levels or both. Then the worker’s income is not curtailed so 


drastically that the debts he may have get beyond being manageable. 

So that really, the debt of an individual, or a nation, is something 
that has to be measured upon the income of that nation and based upon 
the income of the individual. If they maintain a certain ratio, then 
there is no problem. It is only at the point that the debt becomes 
larger in terms of its proper relationship to income that the problem 
develops seriously. 

The Chairman. Mr. Frischknecht, did you want to make a state¬ 
ment in the absence of Senator Watkins ? 


Mr. Frischknecht. Mr. Chairman, and Mr. Reuther, Senator 
Watkins from Utah, a member of this committee, is unable to be in 
attendance today; as I explained last Friday to the chairman and to 
the witnesses on that day. The Senator is down at the American 
Mining Congress Convention. He will subsequently be on his way to 
the National Reclamation Association Convention in the Midwest. 


So, on behalf of Senator Watkins, I want to thank you for your very 
able and comprehensive statement this morning. 

I think you have given the members of the committee here con¬ 
siderable fruit for thought. I am sure if Senator Watkins were here 
he personally would express the same sentiments. 

There are only 1 or 2 questions, Mr. Chairman, that I would like to 
ask Mr. Reuther. 


You mentioned this matter of resources development, as playing a 
very fundamental part in our econpmy. I wonder if such projects as 
upper Colorado River project might not help in this adjustment phase 
with respect to automation, the matter of economic fluctuation, and if 
such projects might not well facilitate our growth in gross national 
product, which you mentioned a moment ago, as being rather essential 
to maintain maximum employment in the economy % 

Mr. Reuther. I think so. I think what needs doing is to have 
the private sector of the American economy carry as much of the load 
as possible; that we ought to have projects in reserve. At the point 
where there is a tapering off of the private sector and we begin to 
develop a serious problem of unemployment, we can then pull out of 
reserve some broad project of resource development which we can 
feed in early enough so that the lag time doesn’t delay the corrective 
impact. 

Mr. Frischknecht. Of course, this upper Colorado River project is 
such a project; isn’t it ? 

Mr. Reuther. I would say that in development of our major river 
valleys in terms of achieving from them their maximum power poten¬ 
tial, flood control, water resources, and so forth, we should have the 


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plans worked out in advance. The engineering work would not 
begin at the point the trouble started in the private sector, but it should 
be done in advance, so that as it appeared that the private sector was 
going to develop a certain tapering off we could begin to feed into 
the economic stream these projects by ordering steel and other basic 
materials needed to get construction under way. 

If we did that at a point where the corrective impace was felt, and 
we get back to a healthy, full employment—full production basis, you 
might taper off on some other project. I see the one supplementing 
the other; if we do our work well and plan far enough in advance, one 
can supplement the other. 

Mr. Frischknecht. Then, of course, we have this other factor, 
that once the project, or some of the projects under a river basin de¬ 
velopment such as the upper Colorado River, then we find the creation 
of new wealth, new jobs, new sources of income, new markets. That 
is what we have in this type of project; is it not ? 

Mr. Reutheb. That is exactly what the development of such a 
project will do. It is exactly what the development of the St. Law¬ 
rence River project will do. Every time you open up new possibilities 
for economic growth and development you automatically create more 
job opportunities. 

Mr. Frischknecht. That is right. We have a whole area in that 
upper Colorado River Basin, waiting for development—new resources, 
new markets for farm products, new markets for manufactured goods, 
new sources of labor supply. 

Mr. Reuther. That is right. 

Mr. Frischknecht. Mr. Chairman, that concludes the only remarks 
I wish to make on behalf of Senator Watkins. We thank Mr. Reuther. 

The Chairman. Mr. Moore, would you like to ask any questions? 

Mr. Moore. I wondered, Mr. Reuther, if you would have any judg¬ 
ment on the relative impact of automation upon the large companies 
in your industry as compared with the so-called independents. Is 
this going to work out to be a lifesaver for the independents, helping 
them to stay in business longer, or is it going to be an added problem, 
if not a coupe de grace? 

Mr. Reuther. I wish the situation were different than it is, but 
you are asking me to express my point of view. 

I believe that automation will tend to intensify the problems of the 
small producers, and tend to give the larger producers a greater ad¬ 
vantage. Automation is the key to lower unit costs and lower unit 
costs is the kev to greater volume. 

It is kind' of a vicious circle you get caught in. If you are selling a 
car at a .certain price, and if you can double the volume of the produc¬ 
tion of that car by^ automation, and so forth, then you get the benefits 
of that greater volpipb and the efficiency of that greater volume and 
you can then lower the price. 

I think that inescapably—and this is true of the automotive in¬ 
dustry, it is true of any basic industry—that the larger producer will 
have greater advantages out of automation that a small producer will 
not have access to. 

Now, the small producer will have some advantages, but by and 
large, they will be more than offset by the sheer size and the total 
volume of the large producer. 


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Essentially that is the problem of the small automotive producers. 
Their problem is not labor costs. Their problem is not design. Their 
problem is essentially his volume. If you can get your volume up 
high enough, you can get your unit cost of production down to make 
yourself competitive. If your volume is not sufficiently high, then 
all the king’s horses and all the king’s men cannot solve the problem 
of high unit costs because of low volume. 

The Chairman. Mr. Ensley? 

Mr. Ensley. Mr. Reuther, when Mr. Davis, vice president of Ford, 
appeared on Friday afternoon, he indicated that at Ford they had 
more than absorbed the displaced workers resulting from new techno¬ 
logical developments and on page 13 of his statement he said that— 

During 1954, total man-hours worked were 14 percent greater than in 1950, an 
increase greater than the increase in our unit production. 

He indicated that they had put more man-hours in per unit than 
before. 

Now, how would you explain that and the problem of displacement 
of workers accompanying such technological developments? 

Mr. Reuther. The impact of automation in the Ford Motor Co. 
came about essentially during a period of considerable expansion, 
and the increase of their production schedules. If automation had 
had its impact as fully in 1954, with a lower schedule of production, 
as they had in 1955, then it would have been a different kind of a 
problem. 

Also, the fact that the Ford Motor Co. was getting a larger share of 
the total automotive markets at the expense of the independents, at 
the expense of Chrysler. 

I think, to really measure the impact of what automation could 
do, you would have to measure it in a situation where everything 
was constant, because if you measure a point where they are expand¬ 
ing, obviously they can absorb the difference, and that is exactly what 
happened in the Ford Motor Co. But if the volume of production had 
remained static; if they hadn’t gotten a larger share of the market, 
and they then had introduced automation, there is no question about 
it, that it would have meant unemployment. But they expanded 
their share of the market. They increased their volume of production 
and that took up the slack that automation otherwise would have 
created. 

Mr. Ensley. Thank you. One more question: You mentioned the 
need for a clearinghouse for information on automation. I think that 
perhaps here is an area where the executive agencies such as the 
Department of Commerce, Labor, and others, could perhaps do a much 
better job on productivity figures, or clearinghouse of related infor¬ 
mation. ~ 

Could your staff supply us with a memorandum on the type of 
information they think would be most appropriate for these executive 
agencies to supply ? Your staff has been very helpful in the past 
on statistical matters. Here is one that you can help us pinpoint 


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(The following letter was later received for the-record*:) 

Congress of Industrial Organizations, 

Washington , D. C., November 9 , 1955 . 

Hon. Wright Patman, 

Chairman, Subcommittee on Economic Stabilization , 

Joint Committee on the Economic Report , TFasAinfltfon, 2). (7. 

Dear Congressman Patman : This letter is in reply to a question put to CIO 
President Walter Reuther when he testified on automation at the hearings con¬ 
ducted by the Subcommittee on Economic Stabilzation of the Joint Committee 
on the Economic Report. At that time Mr. Reuther told the committee that the 
CIO staff would submit a list of some of the types of information it considers 
important for the joint committee staff to obtain in connection with a continuing 
study of the social and economic implications of the new technology. 

I have discussed this matter with Nat Goldfinger and others of the CIO staff 
and am submitting the following suggestions as indicative of the type of informa¬ 
tion we would consider essential to such a continuing study. 

We believe that the joint committee could serve as a clearinghouse for infor¬ 
mation on the social and economic impact of the spreading introduction of 
automation. Through annual or semiannual publications the joint committee 
staff could present its most recent findings on this subject and, in that way con¬ 
tinue the work that the committee started at the hearings. Should special prob¬ 
lems arise or appear to be developing, these staff documents could call attention 
to them and could advise the committee and the public at large on their nature 
and the possible avenues for their solution. 

The basic work of developing the required information on this subject could 
probably best come from special and continuing studies by Government agencies 
and universities, which the joint committee should encourage, and, perhaps, 
through occasional hearings by the joint committee in selected localities. 

We would be glad to discuss the following suggestions with the joint committee 
staff at its convenience, to clarify them, if necessary, and to discuss the scope of 
information that we consider essential to a continuing study of the subject 

1. Case studies 

Such case studies should include the number of layoffs in the plant, by depart¬ 
ment, to reflect layoffs due directly to the installation of automation equipment 
or Indirectly, through bumping, for example; types of workers laid off by sex, age, 
skill, job classification, and seniority; types of workers who have obtained new 
jobs in the plant by sex, age, skill, job classification, and seniority; changes in 
job contents, job classifications, skills, and wage rates—including dilution of 
skills and wage cuts, as well as upgrading; provisions, if any, for retraining the 
work force; labor-management relations aspects—such as possible joint consulta¬ 
tion in preparation for the installation of new equipment and continuing con¬ 
sultation to iron out problems; changes in rates of output; extent to which the 
new equipment is being used to fullest efficiency at the time of the study and what 
changes in employment, job contents, wage structures, etc., may be expected in 
the future as use of the equipment improves in efficiency; estimates of the cost of 
new equipment, rates of output, required size of work force, and wage rates, by 
comparison with previous type of equipment; experience of workers who obtain 
new jobs on new equipment, with special emphasis on the experience of older 
workers; experience of laid-off workers in finding new jobs, what types of jobs 
in relation to skills and wages, in same or different industries, in same or dif¬ 
ferent communities. 

Attempts should be made to engage in on-the-spot studies before, during, and 
after the installation of new equipment. An original case study should be fol¬ 
lowed up by further study or studies of the same plant, after a time interval, to 
obtain an adequate picture of the adjustment problems. 

2. Industry analyses 

Analyses of specific industries which are not possible from regularly published 
available data—such as electronics industry or the radio and television industry 
alone—to include the extent to which automation equipment is now operating, 
as well as plans for the installation of such equipment in the next several years; 
comparisons of employment by type (production, maintenance, supervisory, 
clerical) with output, over periods of time; changes in composition of work force; 
changes in man-hour output and in output per unit of fixed capital; changes 
in prices of goods produced by the industry; changing relationships among firms 


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in the industry—such as the effect of new equipment on the competitive advan¬ 
tage of individual firms; does automation in one firm or group of firms curtail 
output and employment in other firms; competitive position within the industry 
of smaller companies; changing geographic location of plants in the industry; 
impact on communities—to what extent are old plants in the industry closed 
down and new plants built in new areas and the effects on old and new com¬ 
munities in terms of employment, unemployment, and general living conditions. 

3 . Broad, analyses of employment 

Analyses of shifts in employment by broad industry and regional categories— 
which industry groups and categories are growing, which are stagnating, and 
which are declining; shifts in types of employment, such as hourly paid workers, 
skilled and unskilled production workers, maintenance, supervisory, and clerical 
employees. 

4 . Collective-bargaining provisions in relation to technological change 

Studies of provisions in collective bargaining agreements in relation to the 

installation of new equipment—such as joint consultation provisions, company- 
financed retraining programs, provisions for unemployed workers, such as guar¬ 
anteed wage plans, provisions for severance pay in the case of laid-off workers, 
and other similar provisions, with sample clauses and estimates of the extent 
to which such provisions exist. 

5. Business investment 

Studies of present and planned fixed capital investment by industry groups, 
in an attempt to obtain, if possible, estimates of expenditures for expanding 
output as distinct from replacement; expenditures for automation equipment, 
comparative costs of new equipment and old equipment, and comparative output 
of old equipment with anticipated output from new equipment; also,' studies 
of technological changes and new machines, being introduced or planned for 
introduction, by industry group, for the next 3 to 5 years. Such studies should 
be based on studies of the capital equipment producing industries, as well as on 
the industries for whom the equipment is produced. 

6. Education facilities 

Facilities for retraining present work force in new skills; facilities for training 
new workers in required skills; facilities for education of professional engineers, 
technicians, and skilled workers, number of such facilities, instructors, and 
students; quality of facilities and instruction. 

Sincerely yours, 

Stanley H. Ruttenberg, 

Director . 

Mr. Reuther. We should be very happy to cooperate. I am sure 
the staff will follow through. 

I would like to point out this problem, that our experience with 
certain of the executive agencies of the Government has been very 
unsatisfactory in this respect: that they have information that we 
cannot get access to. We can’t get figures on average wages and 
things like that. They tell us, “We have got this only on a confidential 
basis,” and, “If we give it to you, the industry won’t give it to us 
any more.” 

It seems to me all of the basic essential economic facts ought to be 
available to everyone. There should be no economic iron curtains 
behind which this information is hidden. It is quite agreeable for 
us for the executive branches of the Government to handle these mat¬ 
ters, but they have got to change their policy so that all economic 
groups scan have access to the information. 

Under the present situation we go over to the Department of Labor. 
We know that they have certain basic data because they issue reports 
based upon the data. All we get are the conclusions that they arrive 
at based upon their analysis of the data. So we say, “We don’t agree 
with your conclusions. Can we have access to the data?” and the 


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answer is “No.” We say, “Why not? This is the people’s Govern¬ 
ment; how come we can’t?” 

They say, “We have only got this information on the basis that 
it will be used confidentially within the framework of the Government 
operation and will not be made public.” 

That is the problem we have. 

The clearinghouse idea is important because unless there is some 
governmental clearinghouse, and that group assumes the responsibility 
for pulling together and analyzing ana mailing available to the public 
generally the total information on automation and these other new 
developments, then it will not be available because no private economic 
group nas access to all of it. 

Even General Motors, with all their resources, will not know what 
other industries are doing in this specialized field. 

It seems to me that some governmental agency must perform the 
function of a clearinghouse to assemble, to organize, and to make 
available to the public the total information in this important field. 

Mr. Ensley. That is a very interesting point, Mr. Chairman. Thank 
you very much, Mr. Reuther. 

The Chairman. Mr. Reuther, suppose that by 1965 our population 
has increased to, say, 190 million people and we expand our economy 
during that time so as to have the maximum production and the 
maximum purchasing power. 

What do you predict the workweek will be in hours at that time? 

Mr. Reuther. I think by 1965 we can have what I would choose, 
if I were making the decision, a shorter workweek, based upon four 
5-hour days. 

The Chairman. Four 8-hour days? 

Mr. Reuther. That is right. Then we will have leisure, and with 
that leisure we can use it constructively and will develop new inter¬ 
ests, new appetites, and new employment opportunities to satisfy those 
new appetites. 

The Chairman. I have been asked by the other members of the 
committee to ask you and other witnesses, if you are willing to answer 
questions that are submitted in writing to you, if they are submitted 
in time to get them back in the record to be printed. Will that be 
agreeable? 

Mr. Reuther. I will be happy to cooperate. 

The Chairman. Are there any further questions? 

(No response.) 

The Chairman. Thank you very much, Mr. Reuther. 

Without objection, the committee will stand in recess until tomorrow 
at 10 o’clock. 

(Whereupon, at 12:03 p. m., the committee recessed until 10 a. m., 
Tuesday, October 18, 1955.) 


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TUESDAY, OCTOBER 18, 1955 

Congress of the United States, 

Subcommittee on Economic Stabilization of the 

Joint Committee on the Economic Report, 

Washington , D. C. 

The subcommittee met at 10 a. m., Hon. Wright Patman (chairman) 
presiding. 

Present: Representative Wright Patman (chairman of the com¬ 
mittee, (presiding). 

Also present: William H. Moore, staff economist, and Grover W. 
Ensley, staff director. 

The Chairman. The subcommittee will please come to order. 

Mr. Pragan, as research director for International Chemical Work¬ 
ers Union, you are close to an industry which is very highly auto¬ 
mated and has indeed more or less grown up that way rather than 
through conversion. I hope that in your statement you will be able 
to tell us something about the technical skills required of the individ¬ 
ual workers who are pictured in the magazines, watching dials on a 
remote control board in a chemical works. 

While we are not hearing from representatives of the petroleum in¬ 
dustry as such, I assume that many of the operational details of petro¬ 
leum refining, since it, too, is a continuous-flow industry, are similar 
to those in the chemical field. 

Mr. Pragan, we are glad to have you, and you may proceed as you 
desire. 

STATEMENT OF OTTO PRAGAN, DIRECTOR, RESEARCH AND EDUCA¬ 
TION, INTERNATIONA! CHEMICAL WORKERS UNION 

Mr. Pragan. Thank you very much, Mr. Chairman, on behalf of my 
international union and myself. 

I appreciate very much this opportunity to present the views of our 
union on automation in our industry. From the beginning, let me say 
that I am not going to try to give you a definition of automation, be¬ 
cause I am sure you have heard as many definitions as you have had 
people testify here, so I would rather discuss some of the problems 
which we face in our own industry, and leave the theoretical problems 
aside. 

In general terms, the technology of the chemical industry has ac¬ 
complished a kind of continuous automatic production, which I might 
say is surpassed only, if it is surpassed, by the petroleum industry, 
as you yourself, Mr. Chairman, already have mentioned. 

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Very frequently automatic devices are used not only to combine 
several different processes into a single continuous process, but—and 
this is quite important—to derive numerous byproducts at the same 
time, all untouched by human hands. 

I think it might be quite useful before we talk about the problems 
we face to say a little bit about our own industry. I think it is im¬ 
portant, since our industry is a very complicated one, to describe. I 
am talking about the parts of the industry covered under the title 
“Chemicals and Allied Products.” 

Chemicals and allied products, as defined by the United States 
Bureau of the Census, includes three parts: First, basic chemicals, 
such as inorganic and organic chemicals; then chemical products, such 
as synthetic fibers, plasticizers, dyes, and pigments which are used as 
raw materials in other industries; and finally finished products such 
as soaps, drugs, paint, explosives, fertilizers, and vegetable oils. 

The chemical industry is a very, very young industry. It grew tre¬ 
mendously during World War II, ana we hardly had very much of 
a chemical industry prior to World War I. The nature of the chemi¬ 
cal industry, its products and processes, invites extensive use of auto¬ 
mation much more readily than many other industries. 

Let me say a few words about the size of our plants. Although 
we are now a very large industry, employing more than 800,000 em¬ 
ployees, the plants in the chemical industry employ relatively few 
workers. According to census figures for 1953,80 percent of all estab¬ 
lishments in the chemical industry employ less than 100 employees 
and only 2 percent of all plants have 500 or more employees. 

However, these 2 percent employ nearly one-half of the total labor 
force in our industry. Nobody should get the notion that these figures 
mean the chemical industry is made up of small enterprises. On the 
contrary, in our industry eight large companies control approximately 
four-fifths of the total assets. 

The chemical plant is much more mechanized than plants in most 
other industries. If we look at expenditure figures you will see that 
since the end of World War II, 10 percent of all expenditures for new 
plant and equipment in the whole country were used in the chemical 
industries and, as I said before, only the petroleum industry has ex¬ 
pended a large amount. 

This high level of capital investment can be traced quite clearly to 
the increased use of automatic machinery, development of new proc¬ 
esses, new inventions, and new products. 

I might give just a few figures to show the outlay for expendi¬ 
tures per production worker, which in my opinion are quite inter¬ 
esting. For example, in 1954 our industry spent $2,240 per produc¬ 
tion worker for new plant and equipment. This is two and a half 
times more than the average for all manufacturing industry, which 
was $877. It has been estimated that approximately 20 percent of 
these annual expenditures, used for new plant and equipment, go into 
automatic control devices. 

To point up even more forcefully this high degree of mechaniza¬ 
tion in our industry, let us look at the total capital investment per 
production worker. In 1954 this investment amounted to $26,665, 
which is twice as much as the $12,933 investment per worker for all 
manufacturing industries. Since this figure of $26,665 which I just 


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gave represents an average for all parts of the industry, it, of course, 
does not do justice to the more mechanized parts of the chemical 
industry. 

Take, for instance, the manufacture of ammonia. It is estimated, 
by the Manufacturing Chemists’ Association that capital investment 
per production worker comes to $42,500. It is an astonishing figure. 
It means every worker, working in an ammonia plant—the average 
worker, including the highest skilled and the lowest skilled, the op¬ 
erator and the janitor—is responsible for $42,500 worth of equip¬ 
ment. 

The Chai*man. That is four times the average, I believe. 

Mr. Pragan. That is correct. 

The Chairman. For all industries. 

Mr. Pragan. That is very true. 

This continued high rate of investment in new plant and equipment 
in the industry, of course, has far-reaching effects on the relation¬ 
ship between employment and production in our industry. 

1 am not going to give you all the figures which would illustrate 
these facts, or this relationship. The brief submitted has additional 
statistical data. Let me just mention that the increase in production 
in the overall chemical industry in the last 8 years, since the end of 
World War II, amounts to 53 percent, or 714 percent per year, while 
in all manufacturing these figures are 25 percent, or Sty percent per 
year, respectively. 

If we take the two parts of the chemical industry which are most 
mechanized, the inorganic and the organic chemical industries, we 
will see that the increase in production in these two parts of the 
industry comes to 9 percent per year during the last 8 years. 

Let us look at the employment figures and we will see a very as¬ 
tonishing development. During the same period, in the same period 
during which production has risen by 53 percent, the number of pro¬ 
duction workers has risen by 1 percent, or, to be exact, 1.3 percent— 
just 7,000 workers, from 525,000 o 532,000. But this is only part 
of the story, and I would like to dwell in a little more detail on this 
subject. 

First, I would like to say a word of caution as to the number of 
hours, because I am sure that somebody might say “Well, maybe the 
number of hours worked per week has been increased,” so let me 
state that in the chemical industry, in 1947, the number of hours 
worked was 41.5 hours, and in 1954, 41.1 hours. Therefore, prac¬ 
tically unchanged. 

In the inorganic chemical and in the organic chemical industries, 
we see exactly the same picture. In 1947, the average workweek 
in the inorganic chemical industry was 40.3 hours; in 1954,40.8 hours. 
In the organic chemical industry, these 2 figures are 40.3 hours for 
1947 and in 1954, 40.6 hours. So, for all practical purposes we car. 
omit here any discussion of changes in the workweek. 

As I said, chemical output grew by more than 50 percent, and the 
number of production workers remained practically unchanged, hav¬ 
ing increased by only 7,000. 

Now, let us look at the number of nonproduction workers. That is 
a very interesting story as you will see. Nonproduction workers in¬ 
clude professional, supervisory, clerical, and sales personnel. You 


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will see that during the same period in which the number of production 
workers remained unchanged, or practically unchanged, the number 
of nonproduction workers increased by more than 50 percent. Here 
we really have automation in a nutshell, so to speak. 

To give you 2 figures—because I think these 2 figures, Mr. Chair¬ 
man, are most significant for our discussion,, and I hope you will 
excuse me if I use so many figures here—the number of nonproduction 
workers rose from 169,000 in 1947, to 259,000 in 1954. That means 
in 1954, in the overall chemical industry, there were two production 
workers to each nonproduction worker. I do not think there is any 
industry which can compare with this ratio. In 1947 this ratio was 
only 3 to 1. 

If we look at the inorganic and organic chemical industry, we see— 
and, as I said before, these 2 parts are the most mechanized parts in 
our industry—that in the inorganic chemical industry the number of 
nonproduction workers increased by 70 percent since 1947, and in the 
organic chemical industry it has doubled. 

Mr. Moore. I wondered whether the term “nonproduction workers’’ 
included the maintenance people. 

Mr. Pragan. No. Maintenance people are included as production 
workers. Nonproduction workers are professional people, like engi¬ 
neers and chemists, and supervisory personnel, plant managers, fore¬ 
men, and clerical people. 

Mr. Moore. What would the production workers include * 

Mr. Pragan. Production worker means anybody who is engaged 
in the production process, which includes the skilled, semiskilled, and 
unskilled people. 

I come to this a little later, because you will see that the number of 
unskilled people is decreasing in the chemical industry, although the 
number of production workers has remained pretty much unchanged. 
The composition of the production worker force has changed tremen¬ 
dously. Right now, when we compare nonproduction and production 
workers, we are talking about the people directly engaged in the 
production process as compared with the people who are not directly 
engaged in the production process. 

As I said, it might be interesting to the committee to compare this 
development or this ratio between nonproduction people and produc¬ 
tion workers in the chemical industry, with similar figures for all 
manufacturing industries, and you will see that, taking the average 
for all manufacturing industries, including, of course, the chemical 
industry here, that this increase is approximately 27 percent. It 
means 27 percent is the increase of nonproduction workers during the 
last 8 years in all manufacturing industries. 

I would submit that these factors show clearly the phenomenal rise 
in chemical output per man-hour and thus indicate the extent to which 
automatic production has gained a very firm foothold in our industry. 

Let me say a few words about our processes. 

As I said before, production in the chemical industry lends itself 
very readily to the use of automatic devices. As a rule the production 
process in the chemical industry is continuous. You could call it even 
a continuous-flow process, operating 7 days a week, and 24 hours a day. 
It is mass production, but not through an assembly line. 

Often processing is performed in large chemical reactors, fraction¬ 
ating towers, and other installations which are largely regulated by 


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automatic control devices. Continuous processing methods, with the 
aid of controlling devices, make it possible—and this is a very impor¬ 
tant and a very typical process in the chemical industry—make it pos¬ 
sible in a single operation to combine, or to separate several different 
chemicals in order to derive one or more end products, as the case 
may be. 

This frequently permits production of large quantities of chemicals, 
with only a handful of production workers. 

For instance, a recently built plant in the compressed-gas industry 
employs only two production workers. It is tne most astonishing 
development, at least as far as I have seen in our industry, operated 
with just two production workers. Well, I hope the committee will 
not ask me if we have a closed shop in this plant, because I would have 
to report that this plant is not organized. 

In addition, operations in some branches of the chemical industry 
that are concerned with testing, filling, inspecting, and packaging 
after the product has come from the production line, also use automatic 
equipment. This is particularly the case in the soap, drug, and phar¬ 
maceutical industries. 

As one writer described the chemical industry, we have complete 
automation in some plants, from the input of raw materials to the 
output of the finished product. 

The ability to produce chemicals in large volume, of course, reduces 
the unit costs considerably, since the number of production workers 
need not vary directly with changes in the volume of production, as in 
the case of many other industries. Therefore, output can be substan¬ 
tially increased without any increase in the number of production 
workers. 

That means, now, practically speaking, from the point of managing 
such a plant, or from the point oi a union, that labor costs, relatively, 
are a small part in the chemical industry, and that has come about to 
a great extent because of the highly mechanized automatic processes. 

I would like to describe the job content of a few job classifications 
in our industry. Take the production workers. 

The chemical operators are the largest occupational group among 
the production workers. Their jobs include working with equipment 
which controls temperature, pressure, flow and levels of liquids and 
gases, and reaction time. 

Other operator classifications include stillmen, who operate distil¬ 
lation equipment; driers, whose function it is to separate waters from 
solids; batch makers, who operate mixing machines; and millers, who 
operate pulverizing equipment. 

The predominance of automatic equipment and other complex ma¬ 
chinery in the industry makes maintenance skills, such as machinists, 
pipefitters, electricians, and instrument men—a new classification, by 
the way—particularly important. For this reason, the ratio of main¬ 
tenance workers to production workers is greater in the chemical in¬ 
dustry than in most other industries. 

Although detailed data are not available, we have estimated that 
some plants employ as many as 1 maintenance employee to every 2 
production workers. 

I think, Mr. Moore, that is the answer to the question you asked 
previously. 

45006 0—59-11 


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I would like to say a few words about the problems we face in col¬ 
lective bargaining arising out of automation. 

It is quite obvious that automation affects the skills, job security, 
earnings, and working conditions of the employees. Therefore it is 
ever present at the collective-bargaining table. Adjusting the content 
of the collective-bargaining agreement to the changes caused by auto¬ 
matic production methods is a most important responsibility of man¬ 
agement and labor. 

I might add here that our international union has developed edu¬ 
cational programs for their own officers in the techniques of collec¬ 
tive bargaining. One of the important approaches to teaching auto¬ 
mation is to make our union officers alert to the changes which are 
going on, or which will occur in our industry, so they will be able 
to adopt the provisions of our collective bargaining agreements to 
the changed situation. 

This may not appear very important to many people who are not 
directly involved in the collective bargaining process, but to me it is 
one of the most important approaches to this problem of automation. 
Automation is not only a problem for the top level, or for legislation, 
it is a problem to be attacked on the plant level as well—across the 
bargaining table when we negotiate a local collective bargaining agree¬ 
ment. 

To me this is a most important aspect that is sometimes overlooked 
by both management and labor representatives. 

Of the many collective bargaining problems we face, let me just 
mention a few: 

First, there is the matter of scheduling of work. Continuous op¬ 
erations mean rotating shifts, and split workweeks. It means wor t- 
ing daytime hours one week and nighttime the next. It means work¬ 
ing on Saturday and Sunday as regular days of work, and on the day 
of rotating shift, of changing shifts, the employee might work 2 full, 
8-hour shifts within 24 hours. 

The inconvenience caused by this irregular work schedule must 
be alleviated by special premium payments, such as Saturday and 
Sunday premiums, even if these days are not the employee’s sixth and 
seventh days of work. Presently such practices are an exception, 
and Saturday and Sunday premiums are paid only if these days 
are the sixth and seventh days of work. 

Next, there is the question of layoffs. I am not talking about lay¬ 
offs as a national problem. I am talking about layoffs as a plant 
problem. How do we protect employees whose jobs are eliminated 
because of technological changes? Through shortening the work¬ 
week ? Through a form of guaranteed employment plan ? Through 
termination or conversion pay? These are the questions for collec¬ 
tive bargaining, and the answers of course differ from industry to 
industry. 

Let me add, it is quite possible that the final solution here may re¬ 
quire some kind of legislative action, but I am not going into this at 
this time. 

A third problem is the problem of changing skills. New production 
processes created by automation make obsolete machinery and skills 
developed over many years.- A machine can be discarded. The worker 
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Retraining employees to acquire new skills has in some instances al¬ 
ready become a subject of collective bargaining, and will receive even 
more attention as the need becomes more acute. 

For instance, in some of our plants we have set up certain programs^. 
1-year, 2-year, 3-year programs, where people whose jobs are abolished, 
are being retrained. We nave done it in some plants in the Ohio Val¬ 
ley and some plants on the west coast, and these programs work out- 
quite well. 

Let me say, it works out well only if we find the understanding and! 
patience necessary on the part of both union and management. 

Management and unions can do much to meet this problem but here 
again Government action at all levels, municipal, State, and Federal, 
may be required to provide the necessary adjustments in our present 
vocational training programs. 

Closely related to this matter of elimination of jobs is the newly ob¬ 
served trend toward combining two or more jobs. 

For instance, in our industry, we see in several plants the job of the 
welder being combined with tne job of the pipefitter, or the job of the 
electrician being combined with the job of the instrument man. 

Now, the new classification does not mean that the man has acquired 
formal apprenticeship training in his combined job. Shall he get a 
higher joo rate? What shall be his standing in his department? 

Existing job evaluation systems will have to be thoroughly revised 
to cope with this problem as well as with the problem of completely 
new jobs resulting from automation. 

For instance, very often the job of an instrument man is a complete¬ 
ly new job, and in many plants we have, for instance, promotion to in¬ 
strument man without having a description of the job. 

There is no doubt that increased job content and responsibility re¬ 
quire higher pay. 

Another area of the labor contract that will require serious consid¬ 
eration is the seniority clause. The threat of elimination of entire de¬ 
partments or jobs through automation may make unworkable seniority 
systems which are based on department or job seniority and may lead 
to broader-based seniority systems. The relative weight given to 
seniority and ability in cases of promotion also needs to be reexamined. 
The new job, the higher paid job, may be more complex, but the senior¬ 
ity system must assure tne senior employee the opportunity to qualify 
for the higher-paying job. He must not be passed over—and the job 
given to an outsider or to a less senior employee—simply because of 
age or of the disinclination of the employer to provide the training 
which would enable him to qualify for the job. 

What we do here is, as I mentioned before, provide for tr aining 
periods or trial periods in which the employee who bids for the highei 
paid job can prove he is qualified to work on this higher paid job. 

These are only a few of the more important collective bargaining 
issues stemming from automation which the International Chemical 
Workers Union has faced or expects to face in negotiations. 

: Although there may be differences in degree, other unions will face 
the same problems as automation takes roots , and develops in their 
industries. i 

Ini closing I would like to be permitted a few remarks as to more 
general implications of automation. 


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First, I would like to state that our union regards automation as 
another step in the technological development of our economy. We 
should not forget that what we now call automatic technology has 
been developed gradually, taking on different forms in the different 
industries. 


essing equipment were known long before World War II. However, 
the advent of automatic control systems and electronic computers after 
the war opened a new chapter in the technological development or 
p rog ress of American industry. 

We see two real problems: First, the need for adequate employment 
and job opportunities for all, together with a fair distribution of the 
increased productivity—which, after all, is the ultimate goal of auto¬ 
mation—and, second, the need to protect the rights and the position 
of the individual employee in the plant. 

I always come back to the position of the individual employee in 
the plant. 

To maintain full employment and to benefit from this accelerated 
productivity, we have to be concerned more so than ever in the past 
with the problems of distribution of income and of purchasing power. 
The purchasing power of all segments in our economy will have to 
match our ability to produce which is being stepped up so much by 
automatic production methods. If we should fail to accomplish this, 
either by raising the income levels of all consumers, or by keeping 
prices at an appropriate level, automation might become an aggravat¬ 
ing factor in case of unemployment and economic dislocation. But 
even then the fault will not lie with automation as such but with our 


own inability to adjust our economic thinking to the new levels of 
technological development. 

The threat of unemployment exists whenever there is technological 
change. To prevent the threat from becoming a reality in this case, 
we must anticipate the need for such measures as a shorter workweek, 
higher minimum wages, increased unemployment compensation, ex¬ 
pansion of new industries, intensified research programs, and public 
programs for roads, schools, housing, and hospitals, but, above all, we 
should not overlook the fact that at all times, planning on the plant 
and company basis provides the first line of defense against unemploy¬ 
ment. 


Therefore, in conclusion, I would like again to stress that for our 
international union, the human being, the employee, is so very im¬ 
portant. In the final analysis the individual worker is the one who 
will be most intimately affected by this enormous development, and 
it should be with this m mind that we should approach any solution 
to cope with the problem of automatic technology. 

Thank you very much. 

The Chairman. You have presented a fine, comprehensive state¬ 
ment. In the last few paragraphs I think you really focused our 
attention on problems f acing us concerning industry generally, involv¬ 
ing of course full employment and the purchasing power of the people. 

I was amazed to learn that in your industry, the average cost of 
plant—the cost of the plant per worker—is about $43,000, which is 
about 4 times the average for all industry. I believe all industry is 
about $13,000; is it not? Evidently your industry is one that nas 



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taken hold of automation, and it is showing up more quickly in your 
industry. 

' Mr. Pragan. Before the word was ever invented. 

The Chairman. Now then, since the chemical industry is relatively 
young and has grown up since the war, do you have any problems 
of dropping or not hiring men over 45 years of age ? 

Mr.4?RAGAN. Absolutely. That is our problem now. It is almost 
impossible to find a job as a skilled operator if you are, let’s say, 40 
or 45 years of age. It is a question of pension plans, and lowering 
the age of retirement is a very important one. We would say it is not 
so very important now to immediately change the normal retirement 
age from 65 to 60, but to make it possible for an employee to retire, 
what we call at an earlier retirement age, or let’s say at a reduced 
pension income, but still sufficient so that it will be a stimulus for 
people to retire at an earlier age. We have this problem of older 
people, absolutely, in our industry. 

Tne Chairman. Do you have in mind what this early age would be ? 

Mr. Pragan. We now, in our pension negotiations, suggest 55 
years of age. 

The Chairman. Do you contemplate from what you have just said 
that the worker will not only draw this pay, which evidently, will be 
much smaller than for the older workers, but he will also be privileged 
to work at other work? 

Mr. Pragan. On some jobs which might give him smaller earnings, 
smaller income, but it would be additional income to his pension. 

The Chairman. That still leaves what you might call a hiatus from 
ages 45 to 55. What is going to happen to those fellows? 

Mr. Pragan. Here what we have to do is to retrain our people so 
they will have the skills to get a job, although their age may make it 
difficult for them to find a job. Since this cannot be done on a plant 
level, it should be done on a community level, or with the help of State 
or Federal legislation. Our vocational training program, in my 
opinion, should be changed to make it possible that these people could 
acquire new skills. If you look today at our vocational training pro- 

g -am, very few skills are taught, which enable the workers to change 
om one job to another. We have to revamp, to change our voca¬ 
tional training program. We have a great need for it, and I think 
here the impetus has to come from Government agencies, from legis¬ 
lation, and from our schools. 

The Chairman. Looking to the future, let us say 1965, it seems to be 
pretty well agreed that we will have a population of about 190 million 
people instead of our 165 million now. Suppose that our economy 
keeps on growing, from 3 to 5 percent a year, which most economists 
seem to think it will, what do you think the workweek will be at that 
time in hours ? 

Mr. Pragan. In 19651 am quite sure it will be 35 hours a week. 

The Chairman. As compared to 40 hours a week now ? 

Mr. Pragan. Yes, sir. 

The Chairman. Would you like to make a statement, Mr. Frisch- 
knecht? 

Mr. Frischknecht. Mr. Chairman, I might begin by apprising the 
witness of the fact that Senator Watkins from Utah, who is a member 
of this committee, is unable to be present, and I am Mr. Heed Frisch¬ 
knecht, secretary and consultant to the Senator. 


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The Senate has asked me to appear at the hearing here; through 
the courtesy of the chairman of the committee, I have been permitted 
to ask some questions which the Senator would ask if he were able to 
be present, so with that little explanation to you personally, there are 
a few questions I would like to ask. 

Is it a fair statement to say that from the figures you presented on 
pages 4, 5, and 6 of your statement, that automation, or perhaps the 
general demand for chemicals, has created new jobs for nonproductive 
workers? That is, for workers outside of those that your union 
represents? Is that a fair statement? 

Mr. Pragan. It is a fair statement that automation has created jobs 
in the nonproduction labor force. 

Mr. Frischknecht. By that you meant primarily the clerical and 
maintenance workers, and so forth ? 

Mr. Pragan. That is right, but I would like to add that these people 
who are added to the nonproduction labor force have not come out of 
the production labor force. The only people who are added to the 
nonproduction labor force coming out from production, out of the 
production part of the labor force, are foremen, or supervisors. 

Mr. Frischknecht. I understand that. We have had a total in¬ 
crease in the employment in the chemical industry, have we not? 

Mr. Pragan. That is right. The total increase in the chemical 
industry is approximately, I would say, 100,000 over this period of 
8 years. 

Mr. Frischknecht. Now- 

Mr. Pragan. 106,000. 

Mr. Frischknecht. Isn’t it true also that historically labor costs 
have always been a small part of the total costs in the chemical 
industry ? 


Mr. Pragan. That is right; comparatively speaking. 

Mr. Frischknecht. So this thing we call automation, or the use 
of continuous processing devices, is nothing new in this industry, 
is it—the use of continuous processes is not new ? 

Mr. Pragan. That is right. 

Mr. Frischknecht. Now then, actually, as far as automation is 
concerned, in the light of the figures you have given us here this 
morning, with respect to production workers, what we might antici¬ 
pate in the future in the way of lesser requirements for production 
workers seems not to be too great. In other words, their ability to 
increase the continuous processing of chemicals, would seem not to 
lend itself to continued reductions, and reduction in the number of 
employees. 

You mentioned, for example, 1 gas plant where there were 2 pro¬ 
ductive employees now involved in the manufacturing process. Would 
you think that in the future the possibility exists that these two 
might go by the board ? 

Mr. Pragan. Pardon me, sir. I would like to be careful here. 
There is one figure I might add to the many figures I already men¬ 
tioned that is quite interesting. 

In our industry, 77 percent of the amount spent every year for 
expenditures of plant and equipment, go into new plants. It means 
it is part of an expansion program. Either it is a new plant or it 
is an addition to a present plant. 



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Mr. Frischknecht. That is true, and I think the members of the 
committee understand that. 

As the demand for chemicals has increased, so has our capacity to 
produce chemicals. 

Mr. Pragan. If this expansion program should come to a stand¬ 
still, or be much smaller, then the danger of unemployment in the 
chemical industry is a great one. 

Mr. Frischknecht. There are possibilities perhaps for further re¬ 
ductions in production workers, or the number of production workers, 
but isn’t it decreasing; isn’t the possibility of there being fewer going 
to perhaps increase, but at a decreasing rate? In other words, it 
appears to me that you are not going to lose those two production 
workers you have got at your compressed-gas plant; isn’t that correct? 

Mr. Pragan. This is correct. Maybe I should not have used this 
example of two people. 

Mr. Frischknecht. In other words, maybe we are reaching the 
point of diminishing return here as fat as this industry is concerned? 

Mr. Pragan. I don’t think so. What is going to happen here is, 
if we didn’t have these automatic devices in our chemical industry, 
say the number of production workers would not be 530,000 but 
maybe 600,000 or 730,000. It means we would hav eattracted many, 
many more people in our industry. We have not done it. 

Mr. Frischknecht. There is one thing we have to take into con¬ 
sideration here: That the manufacturing processes in chemicals have 
always been of a highly technical nature. 

Mr. Pragan. That is right. 

Mr. Frischknecht. In which mechanical equipment or automatic 
equipment or the distillation processes themselves have always 
required fewer employees than most other manufacturing industries. 

Mr. Pragan. Certainly. 

Mr. Frischknecht. That is why I asked you if it wasn’t true that 
historically that the percentage of labor costs as they relate to total 
costs in this industry, were relatively low, were relatively smaller than 
in most industries. 

Mr. Pragan. That is true. 

Mr. Frischknecht. I was interested in some of the remarks you 
made with respect to some items that might, or already have, become 
questions which affect the bargaining process, which the collective 
bargaining process has attempted to handle. You mentioned this mat¬ 
ter of the scheduling of work. Of course I was drawn immediately 
back to tiie illustration you used of the compressed gas plant, where 
you indicated that only two production workers were involved. I 
was wondering what kind of supermen you have there. Do those men 
get a weekend off once in a while or do they work alternately 12 hours 
or is the process such that those individuals can be away from the 
plants for long periods of time? That was just a little thought that 
came to mind. 

Mr. Pragan. That is a very good question. 

Mr. Frischknecht. Perhaps maybe the union needs to take a look 
at the best interests of those two workers. 

Mr. Pragan. We have to organize them first. 

The Chairman. Are those plants actually—is that plant actually 
in operation? 


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Mr. Pragan. It is in operation now. 

Mr. Frischknecht. This matter of retraining- 

Mr. Pragan. May I make a remark about the plant with the two 
production workers ? 

Mr. Frischknecht. I realize why you made the illustration. We 
don’t want to take it out of the context you put it in. 

This matter of retraining of production employees: I presume your 
remarks here are directed in their behalf. Don’t we have some indi¬ 
vidual responsibility on the part of people to kind of protect their own 
best interests, keep themselves apprised of what the employment out¬ 
look might be as a result of new innovations in their industry. I 
imagine lots of blacksmiths some 25 or 30 years ago began to think of 
becoming auto mechanics, and so forth. Don’t we have a correspond¬ 
ing responsibility of people here? This leads into another question. 
You mentioned something about the matter of retraining and schedul¬ 
ing the workers, as requiring some legislation. I presume that should 
be here by the Congress. I am just wondering—and I know Senator 
Watkins would be interested in knowing what the union itself has 
done in the way of providing training programs for their own mem¬ 
bers. These union members pay dues, and so forth. What type of 
services have they been able to get out of the union in terms of a 
training program ? 

Mr. Pragan. May I say a few words in replying to your question? 

Mr. Frischknecht. Yes, sir. 

Mr. Pragan. I do not think a union can solve the problem. What 
we can do is to talk about it and do something about it through col¬ 
lective bargaining. Let me tell you, for instance, about one plant, 
what we do. 

No international union or no local union is equipped to retrain 
people. It shouldn’t. That is not their job, but what we should be 
aware of, and what we do is to negotiate into the contract with a 
company a provision whereby people are trained in the certain skills, 
at their own time. 

Take a pipefitter. In one plant we have an agreement where the 
pipefitter has the opportunity to learn the maintenance of certain 
new control devices, by going to a course set up by the school system 
in his community. He is doing it on his own, after work, but that is 
all really a union can do. 

To believe that we can set up such courses and really relieve the 
situation, I think, would be a dream. It would not be fair for my 
union to make such a suggestion because I am sure the union cannot 
do it. 

However, what we can do, and that is the reason I talk about the 
situation, is to change our apprenticeship setup, which is old fashioned 
now. 

Mr. Frischknecht. This is the union apprentice setup you are 
speaking of? 

Mr. Pragan. No. We are an industrial union. We are not a craft 
union. That means we are taking in, not only- 

Mr. Frischknecht. Is yours a CIO affiliate ? 

Mr. Pragan. Our union is affiliated with the AFL. As I said, gov¬ 
ernment, for instance, on a local level or the school system, together 
with the apprenticeship bureau, with the union movement, might set 


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AUTOMATION AND TECHNOLOGICAL CHANGE 163 

up new requirements, new courses, and find new resources to make it 
possible for people who might be laid off. 

Mr. Frischknecht. We have all kinds of adult education classes 
sponsored by local boards of education, by our high schools, extension 
sources by our colleges, and State vocational schools. 

Mr. PbAgan. It will never do. 

Mr. Frischknecht. We do it in Utah. 

Mr. Pragan. We have them in Ohio, too, but that will never give 
a man technical skills he needs in order to make a living. 

Mr. Frischknecht. Perhaps this is a subjective matter of opinion, 
and I do not wish to quibble with you, except to say that there is a 
large body of informed opinion that believes the effectiveness of the 
adult education opportunities I have mentioned is relatively good. 

Now, the point I want to make here, perhaps this is in part a com¬ 
munity problem; perhaps it is partly a union problem, hut it isn’t 
always all the employers responsibility, is it? 

Mr. Pragan. No. I didn’t say it is only the employer’s responsi¬ 
bility. 

Mr. Frischknecht. I didn’t imply you said that. I was merely 
asking what your opinion was. 

Is this in your opinion and in the opinion of your union entirely 
the responsibility of the employer? 

Mr. Pragan. No. It is also the responsibility of the union and it 
is also the responsibility of the community, and of Government 
agencies. 

Mr. Frischknecht. I think Senator Watkins would agree with 
you, that here we have a number of very interested parties, who have 
a concern, and ought to have a concern about what nappens to these 
displaced people. But, I think the Senator would insist that it is 
a responsibility that involves a number of parties, not just the em¬ 
ployer. 

Mr. Pragan. I agree. 

May I say one word? I agree entirely with what you said. In 
fact, I mentioned it before. When I talked about labor and man¬ 
agement, I didn’t mean here alone, the local union labor leadership 
m a particular plant. I am talking here about labor and management 
from a higher level. 

Mr. Frischknecht. And of course I want you to understand that 
my only purpose in being here this morning on behalf of Senator 
Watkins is to get some information into the record which will give 
the members of this committee an opportunity to understand aU of 
the facts and all of the ramifications of automation. 

I am not here, and I am not asking these questions for the purpose 
of trying to represent more one interest than another. 

I might add that Senator Watkins has very fine relationships with 
the CIO in the State of Utah. We have some very fine labor leaders 
in that State. 

Mr. Pragan. I understand fully. 

Mr. Frischknecht. Now, the matter of seniority and superannua¬ 
tion of employees. You mentioned the individuals displaced who 
are 45 years of age or over. Isn’t that a general problem that almost 
all people of that age face, if they lose a job? As we grow older, 
of course, our usefulness, our potential usefulness to an employer 
is less. We have a fewer number of good productive years left. I 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


think this is no less true of production workers in the chemical in¬ 
dustry than it is of politicians who have reached the upper years of 
their life span. It is no less true of schoolteachers who lose a job, 
or of Government employees or any other professional group ot 
people. Isn’t that true? 

Mr. Pragan. Pardon me. It is not quite the same, because the age 
element is only one of the problems. 

Mr. Frischknecht. I realize that. You were speaking here of 
the age factor and you used the age 45. And, of course, I think that 
factor applies to practically all people who lose a position. 

Mr. Pragan. The seniority problem is not only a problem of age. 
What we are really now facing is the following problem: Let’s say 
somebody got a better job and he is only 40, and here is an opening. 
His job was a very specialized job. It was a job where he got some 
special training to take care of automatic equipment and now our 
present seniority system does not make it possible that this job be 
filled according to seniority. The man who would get it under differ¬ 
ent circumstances might be maybe 30 or 35 years of age, because in 
the chemical industry, as in many other highly technical industries, 
promotion is mostly done by the way of job seniority, or job classifica¬ 
tion, or departmental seniority. 

Mr. Frischknecht. Mr. Pragan, I want to thank you very much 
on behalf of Senator Watkins for your very fine and very able and 
comprehensive statement. 

I am particularly impressed with the objectivity that you ex¬ 
hibited in your statement and your answers to questions this morning. 

Thank you very much. 

Mr. Pragan. Thank you. 

The Chairman. I assume that you will be willing to answer anj 
questions any member of the committee wants to ask yoii between 
now and the time the record closes? 

Mr. Pragan. Yes, sir. 

The Chairman. Thank you very much for your appearance and for 
your contribution. 

Mr. Pragan. Thank you very much. Our union appreciates very 
much the opportunity to appear here. 

(The prepared statement of Mr. Pragan follows:) 

Statement of Otto Pragan, Director, Research and Education, International 

Chemical Workers Union 

I appreciate this opportunity to present the views of the International Chemical 
Workers Union on automation in the chemical industry. We are very glad that 
this committee has undertaken a study on automation and technological change 
because this problem affects the welfare of the members of our union. 

I 

There are as many definitions of the term "automation”—or, as I prefer, 
“automatic technology”—as the number of books, articles, and treaties that 
have been written on this subject I am sure this committee has heard a few 
more. 

It is not very meaningful for the purpose of this hearing to define automation 
in a general way because its application differs widely from industry to Industry. 
It is well to remember, as one writer has already noted, that automation is 
relative and not absolute. What many people today describe as automation in 
other industries has for years been common practice in the chemical industry. 

In general, the technology of the chemical industry has accomplished a form 


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of continuous automatic production which is probably surpassed only by tbe 
oil-refining industry. Frequently, automatic devices are used not only to com¬ 
bine several different processes into a single continuous process, but to derive 
numerous byproducts as well, all untouched by human bands. 

II 

For our purposes it will be useful to have a clear picture of tbe nature of 
tbe chemical industry. In reality, it is a combination of many different indus¬ 
tries. “Chemicals and allied products,” as defined by the Bureau of the Census, 
includes basic chemicals such as inorganic and organic chemicals, chemical 
products such as synthetic fibers, plasticizers, dyes, and pigments used as raw 
materials in other industries, and, finally, finished products such as soaps, drugs, 
paints, explosives, fertilizers, and vegetable oils. 

The “chemical industry,” which is the term used to describe the various 
industries in the chemical field which were mentioned previously, is a relatively 
young industry. It is the fastest-growing industry in our economy and ranks 
sixth in volume of sales among the manufacturing industries. 

The nature of the industry, its products, and processes, invites the extensive 
use of automatic technology more readily than many other industries. 

III 

Characteristically, plants in the chemical industry employ relatively few 
workers. The plants, however, are quite numerous. According to Census figures 
for 1953, 80 percent of all establishments in the chemical industry employ fewer 
than 100 workers. Only 2 percent of all plants have 500 or more employees. 
However, these 2 percent employ nearly one-half of the total labor force in the 
industry. These figures do not mean that the chemical industry is made up 
of so-called small enterprises. On the contrary, it is an industry in which 
eight large companies control approximately four-fifths of total assets in the 
industry. 

Next, one finds in the chemical plant much more mechanized equipment 
than in most plants of other industries. Since the end of World War H, 10 
percent of all expenditures for new plant and equipment were in the chemical 
industry. Only the petroleum industry expended a larger amount. 

This high level of capital investment can be traced to the increased use of 
automatic machinery, the development of new processes, new inventions, and 
new products. The amount of this outlay can be best expressed in terms of 
expenditures per production worker. For example, in 1954 the industry spent 
$2,124 per production worker for new plant and equipment. The average for 
all manufacturing was $877. It has been estimated that approximately 20 
percent of the annual expenditures for new plant and equipment goes into 
automatic-control devices. 

To point up even more forcefully the high degree of mechanization in the 
chemical industry, we need only look at the total capital investment per pro¬ 
duction worker. In 1954 this investment amounted to $26,665—more than twice 
the $12,933 investment per worker for all manufacturing. Since the figure for 
the chemical industry is an average for all parts of the industry, the per worker 
investment is, of course, far greater in the parts where automation is well 
advanced. For instance, it has been estimated by the Manufacturing Chemists 9 
Association that capital investment per production worker in the manufacture 
of ammonia is $42,500. 

This continued high rate of investment in new plant and equipment in the 
industry has had far-reaching effects on the relationship between employment 
and production, as can be readily seen from the following tables: 


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Table 1.— Industrial production indew 


[1047-49 average equals 100] 




All manu¬ 
facturing 

Chemicals and allied products 


Year 

Total 

Inorganic 

chemicals 

Organic 

chemicals 

1047__ 

100 

97 

96 

94 

1040_ 

103 

103 

101 

106 

1040 ___ r _ 

97 

101 

103 

100 

1950. ..:. .. 

113 

121 

120 

128 

1051 _ _ 

121 

136 

135 

149 

1952. 

125 

137 

137 

141 

1053_ _ 

134 

147 

149 

155 

1054_ _ 

125 

148 

157 

152 



Souroe: Federal Reserve Board. 


Table 2. —Employment in all manufacturing and in chemical industry 


[In thousands] 


Year 

All manufacturing 

Chemicals and allied products 

Total 

Inorganic 

Organic 

All em¬ 
ployees 

Produc¬ 

tion 

workers 

All em¬ 
ployees 

Produc¬ 

tion 

workers 

All em¬ 
ployees 

Produc¬ 

tion 

workers 

All em¬ 
ployees 

Produc¬ 

tion 

workers 

1947. 

15,290 

12,795 

694 

525 

72 

55 

227 

180 

1948. 

15,321 

12,715 

700 

522 

75 

56 

234 

183 

1949. 

14,178 

11,597 

663 

484 

72 

53 

216 

164 

1950. 

14,967 

12,317 

682 

494 

73 

53 

229 

173 

1951. 

16,104 

13,155 

749 

536 

83 

60 

265 

198 

1952. 

16,334 

13,144 

770 

537 

87 

62 

283 

204 

1953. 

17,238 

13,833 

807 

553 

94 

67 

317 

222 

1954. 

15,989 

12,588 

791 

532 

101 

72 

299 

204 


Source: U. S. Bureau of Labor Statistics. 


These tables indicate that the substantial increase in chemical output since 
1947 has come about without any significant increase in the number of produc¬ 
tion workers and, therefore, is traceable to automatic production methods. In 
this connection it is important to note that over this period the average work¬ 
week in the chemical industry remained practically unchanged: all chemicals, 
1947, 41.5 hours; 1954, 41.1 hours; inorganic chemicals, 1947, 40.3 hours; 1954, 
40.8 hours; organic chemicals, 1947,40.3 hours; 1954,40.6 hours. 

While growth of production in all manufacturing during the period 1947-54 
'Was 25 percent, or 3% percent per year, production in the chemical industry 
increased by 53 percent, or 7% percent per year. During the same period the 
increase in production of inorganic and organic chemicals came to an average of 
9 percent per year. 

While chemical output rose by more than 50 percent, the number of produc¬ 
tion workers remained practically unchanged, having increased by only 7,000, 
that is, 1.3 percent. But the number of nonproduction workers, that is pro¬ 
fessional, supervisory, clerical and sales personnel, increased by more than 50 
percent—from 169,000 in 1947 to 259,000 in 1954. Thus, in 1954 there were two 
production workers to each nonproduction worker, while in 1947 the ratio was 
as high as 3 to 1. This increase in nonproduction employment also is partly 
traceable to automatic production methods. 

The influence of automatic production equipment becomes even more obvious 
in inorganic chemicals where the number of nonproduction workers increased by 
70 percent since 1947, and in organic chemicals where the number of nonproduc¬ 
tion workers doubled. 

In contrast with the more-than-50-percent gain in nonproduction workers in 
the chemical industry, the net gain in all manufacturing during this period was 
27 percent. 


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These factors show clearly the phenomenal rise in chemical output per man¬ 
hour and thus indicate the extent to which automatic production has gained 
a firm foothold in the industry. 

IV 

Production in the chemical industry lends itself readily to the use of auto¬ 
matic devices. As a rule, the production process is a continuous one, operating 
7 days a week and 24 hours a day. It is mass production—not through an as¬ 
sembly line—but by means of a continuous, automatic process. Often, manu¬ 
facturing is performed in large chemical reactors, fractionating towers and 
other installations which are largely regulated by automatic control devices. 

Continuous processing methods with the aid of controlling devices make it 
possible in a single operation to combine or to separate several different chemi¬ 
cals in order to derive one or more end products, as the case may be. This fre¬ 
quently permits production of large quantities of chemicals with only a handful 
of production workers. For instance, a recently built plant in the compressed 
gas industry employs only two production workers. In addition, operations in 
some branches of the chemical industry that are concerned with testing, filling, 
inspecting and packaging, after the product has come from the production line, 
also use automatic equipment. This is particularly the case in the soap, drug 
and pharmaceutical industries. 

Ability to produce chemicals in large volume reduces unit costs considerably 
since the number of production workers need not vary directly with changes in 
the volume of production as in the case of many other industries. Therefore, 
output can be substantially increased without any increase in the number of 
production workers. 

Among production workers in the industry, chemical operators are the 
largest occupational group. Their jobs include working with equipment which 
controls temperature, pressure, flow and levels of liquids and gases, and reaction 
time. Other operator classifications include stillmen, who operate distillation 
equipment; driers, whose function is to separate waters from solids; batch 
makers, who operate mixing machines; and millers, who operate pulverizing 
equipment. 

The predominance of automatic equipment and other complex machinery in the 
industry makes maintenance skills, such as machinists, pipefitters, electricians, 
instrument men, etc., particularly important. For this reason, the ratio of main¬ 
tenance workers to production workers is greater in the chemical industry than 
in most other industries. Although detailed data are not available, some plants 
employ as many as 1 maintenance employee for every 2 production workers. 

V 

It is quite obvious that automation affects the skills, job security, earnings and 
working conditions of the employees. It is ever present at the collective bargain¬ 
ing table. Adjusting the content of the collective bargaining agreement to the 
changes caused by automatic production methods is a most important responsibil¬ 
ity of management and labor. 

In this connection, I would like to point out some of the problems we face in 
the chemical industry. 

First, there is the matter of scheduling of work. Continuous operations mean 
rotating shifts and split workweeks. It means working daytime hours one 
week and nighttime the next. It means working on Saturday and Sunday as 
regular days of work. And on the day of rotating shift, the employee might work 
two full 8-hour shifts within 24 hours. 

The inconvenience caused by this irregular work schedule must be alleviated 
by special premium payments, such as Saturday and Sunday premiums even if 
these days are not the employee’s sixth and seventh days of work. Presently, 
such practices are an exception and Saturday and Sunday premiums are paid 
only if these days are the sixth and seventh days of work. 

Next, there is the question of layoffs. How do we protect employees whose* 
jobs are eliminated because of technological changes? Through shortening the 
workweek? Through a form of a guaranteed employment plan? Through termi¬ 
nation or conversion pay? These will be questions for collective bargaining and 
the answers may differ from industry to industry. However, it is quite possible 
that the final solution to this problem may require legislative action. 

Also to be considered is the problem of changing skills. New production proc¬ 
esses created by automation make obsolete machinery and skills developed over 
many years. The machine can be discarded. The worker has to be retrained. 


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Retraining employees to acquire new skills has in some instances already 
become a subject of collective bargaining and will receive even more attention as 
the need becomes more acute. Management and labor can do much to meet this 
problem but, here again, Government action on all levels may be required to pro¬ 
vide the necessary adjustments in our present vocational training programs. 

Closely related to this matter of elimination of jobs is the newly observed trend 
toward combining two or more jobs, such as welder and pipefitter, and instrument 
man and electrician. Existing job evaluation systems will have to be thoroughly 
revised to cope with this problem, as well as with the problem of completely new 
jobs resulting from automation. There is no doubt that increased job content 
and responsibilities require higher pay. 

Another area of the labor contract that will require serious consideration is the 
seniority clause. The threat of elimination of entire departments or jobs through 
automation may make unworkable seniority systems which are based on depart¬ 
ment or job seniority and may lead to broader-based seniority systems. Simi¬ 
larly, the relative weight given to seniority and ability in cases of promotion 
needs to be reexamined. The new job may be more complex, but the seniority 
system must assure the senior employee the opportunity to qualify for the higher 
paying job. He must not be passed over—and the job given to an outsider or to 
a less senior employee—simply because of age or the disinclination of the em¬ 
ployer to provide the training which would enable him to qualify for the job. 

These are only a few of the more important collective-bargaining issues stem¬ 
ming from automation which the International Chemical Workers Union has 
faced or expects to face. Although there may be differences in degree, other 
unions will face the same problems as automation takes roots and develops in 
their industries. 

VI 

Turning to the more general implications of automation, I should state that 
our union regards automation as another step in the technological development 
of our economy. We should not forget that what we now call automatic tech¬ 
nology has been developed gradually, taking on different forms in the different 
industries. In the chemical industry automatic machinery and continuous proc¬ 
essing equipment were known long before World War II. However, the advent 
of automatic control systems and electronic computers after the war opened a 
new chapter in the technological progress of American industry. 

Labor sees two real problems: first, the need for adequate employment and 
Job opportunities for all, together with a fair distribution of the increased pro¬ 
ductivity—which, after all, is the ultimate goal of automation—and, second, the 
need to protect the rights and the position of the individual employee in the plant. 

To maintain full employment and to benefit from this accelerated productivity 
we have to be concerned, more so than ever in the past, with the problems of 
distribution of income and of purchasing power. The purchasing power of all 
segments in our econoihy will have to match our ability to produce which is being 
stepped up so much by automatic production methods. If we should fail to 
accomplish this, either by raising the income levels of all consumers or by keeping 
prices at an appropriate level, automation might become an aggravating factor 
in case of unemployment and economic dislocation. But, even then, the fault will 
not lie with automation, as such, but with our own inability to adjust our eco¬ 
nomic thinking to the new levels of technological development. 

The threat of unemployment exists whenever there is technological change. 
To prevent the threat from becoming a reality in this case, we must anticipate 
the need for such measures as a shorter workweek, higher minimum wages, 
increased unemployment compensation, expansion of new industries, intensified 
research programs, and public programs for roads, schools, housing, and hos¬ 
pitals. But, above all, we should not overlook the fact that at all times planning 
on the plant and company basis provides the first line of defense against 
unemployment. 

In conclusion, let us return to the individual—the human being. In the final 
analysis, he is the one who will be most intimately affected by this enormous 
development that so many envisage. It should be with this in mind—the human 
use of human beings (to borrow a phrase from Norbert Weiner)—that we should 
approach any solution to cope with the problem of automatic technology. 

The Chairman. Our next witness will be Mr. Don G. Mitchell, chair¬ 
man and president, Sylvania Electric Products, Inc. 


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Mr. Mitchell, you have been referred to by Business Week as a vocal 
exponent of decentralization. Your company, I understand, has some 
53 plants and warehouses, and that as a result jour company, Sylvania, 
is a highly decentralized operation, both physically ana in the way it is 
managed. 

We are interested in your philosophy and thinking on this score. 
What will be the effect of automation on decentralization, since you are 
the first of our witnesses in your industry. 

I take it you will introduce us to some new terms like printed circuit 
assembly, and terms of that kind, that we don’t know anything about, 
which we should be very glad to learn about. We are mighty glad to 
have you, Mr. Mitchell. 

You may proceed in your own way. 

STATEMENT OF SON G. MITCHELL, CHAIRMAN AND PRESIDENT, 
SYLVANIA ELECTRIC PRODUCTS, INC. 

Mr. Mitchell. Thank you, Mr. Chairman. 

I have a printed document here which I will stick to rather closely. 
I have some charts that will come on from time to time. 

I would like to say that this is not the kind of a discussion which 
requires my going through it without interruption, so I want you to 
feel free, if you will, sir, to interrupt at any time and ask for a full 
explanation of any point. We can enlarge any point, we can cut 
out any point as we go along, because my sole purpose here is to get 
you the information you would like to have about our thinking in our 
industry on this very important subject. 

Before I discuss some of the effects of mechanization, or automation, 
on the electronics industry in general, and my company specifically, 
I should like to comment briefly on the overall subject before this com¬ 
mittee : The current relationship between man and the machine, and 
the future trends. 

I am sure that everyone who has already appeared before this com¬ 
mittee, and the subsequent witnesses, will agree that some rather 
extreme statements have been made about automation during the past 
year, and particularly in recent months. On the one hand, automation 
has Deen deplored as a trend which will disrupt our entire economy; 
on the other, some rather fantastic claims have been made which would 
have you believe that the machine will one day relegate man to a life 
of eternal leisure—monotonous leisure, I might add—interrupted only 
by occasionally feeding paper tape to some hungry electronic 
computer. 

I know that the first extreme point of view is wrong; the evidence 
against it is overwhelming, as some of the gentlemen who have already 
appeared here have pointed out. All I can say about the second point 
ox view is that I don’t think that it will ever come to pass, but if 
it does, I hope I am not around to see it. But I have no real fears on 
that score: the human being has done a pretty good job of taking care 
of himself in the past, and I cannot see where the future will be any 
different. 

In studying any trend which seems to pose some immediate or po¬ 
tential problems, it seems to me that we could, of course, have what 
might be termed a “precautionary” point of view—in other words, 
what is this trend doing to the economy, and should it be moderated, 


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or perhaps stopped altogether? Far more important, however, is 
the more positive approach—what opportunities does this trend pre¬ 
sent, and now can we direct it and stimulate it to be even more pro¬ 
ductive than it has been in the past ? 

PROBLEMS ARE OPPORTUNITIES 

In the pressure of modern-day living, there is all too little oppor¬ 
tunity to project a situation into the future and to imagine the exist¬ 
ence of circumstances which do not now exist. The constant and 
completely understandable tendency is to approach some situation in 
the light of past experience and current facts, but that is only taking 
a status quo approach to the problem. Circumstances change rapidly, 
as we all know, and many a situation which appears at first to con¬ 
stitute a problem, or even a threat, is actually an opportunity to do 
something more effectively and to a greater common good than has ever 
been done before. 

So it is with mechanization or automation, which are really one 
and the same thing. Automation is only a more recent term for 
mechanization which has been going on since the industrial revolu¬ 
tion began. 

Certainly the machine presents some short-term dislocations which 
cannot be ignored by anyone, least of all the persons who are dis¬ 
located. It doesn’t do much good to try to convince an individual 
worker who does get displaced from an individual job that over a 25 
years’ span there is such thirg as technological unemployment. He 
doesn’t care whether there is or is not. All he is worried about is 
that he lost a job. Without question every technological improve¬ 
ment has brought broader employment and higher living standards. 
Sometimes in the process some things may happen which either 
shouldn’t happen or could be substantially minimized. Short-term 
dislocations present a severe test of management. In this respect I 
should like to point out that a basic policy at Sylvania has been for 
many years to make every effort to find a new job for anyone dis¬ 
placed by a machine. We have been extremely successful in imple¬ 
menting this policy; in fact, I do not recall any. instance that might 
be termed a serious dislocation of any sort. 

In explaining that, I might add that a large percentage of our em¬ 
ployees are women because of the high degree of manual dexterity 
required in many of our assembly operations. In the main, women 
do not intend to stay with you until they reach retirement age. The 
majority of them hope to get married some day, and, therefore, we 
perhaps do not have some of the problems encountered in industries 
that employ a hundred percent male labor. 

As it does in so many cases—in fact, most cases—the answer to any 
problems of dislocation seems to lie about midpoint between the 
extremes, between the strictly emotional point of view, on the one hand, 
and the overly practical one, on the other. If we recognize that short¬ 
term problems do sometimes exist and that they can be resolved, but 
do not let the existence of short-term situations becloud the fact that 
the broader and broader use of the machine is overwhelmingly for 
the common good, then we will have acted in the traditions of a 
democratic society. 


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THE IMPACT OF MECHANIZATION ON INDUSTRY AND SYLVANIA 

In approaching mechanization or automation from the standpoint 
of its influences on the electronics industry, Sylvania as a member 
of that industry, and industry as a whole, a number of general state¬ 
ments can be made: 

1. Without large-scale use of automatic and semiautomatic equip¬ 
ment, the electronics industry, as we know it today, would not exist. 

2. Without extensive mechanization, the total working force avail¬ 
able to the electronics industry today could not even remotely produce 
the vast volume and variety of goods needed and demanded by the 
public, commerce, industry, and the armed services. The machine 
not only has brought increasingly higher production, steadily decreas¬ 
ing cost to the consumer, and constantly increasing product quality, 
but has actually met what would otherwise be a labor shortage. 

3. The increased demand for, and availability of, the products of 
the electronics industry has brought a great expansion of the basic 
materials industries: metals, glass, chemicals, plastics. 

4. Thousands upon thousands of small businesses have been formed 
over the past few years, especially the postwar years, to meet the needs 
of the electronics manufacturers. Even a largely vertically integrated 
company such as Sylvania, which produces most of its own compo¬ 
nents and materials, places millions of dollars worth of business with 
small concerns all over the Nation. 

5. Hundreds of communities have gained new economic strength, 
either through the expansion of an existing facility, or the advent of 
a new plant. In 1940, as you will see from the chart (fig. 1), Syl¬ 
vania had 4 plants, 4,600 employees, and an annual payroll of $5 
million; today we have 43 plants and 16 laboratories in 40 commu¬ 
nities in 11 States, employment of 26,000, and an annual payroll of 


GROWTH OF SYLVANIA 
1940 - 1955 



45006 0—59-12 


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$111 million. I use that word “today” advisedly, because other 
projects are in the planning stage. 

6. An enormous new business has sprung up, completely outside the 
electronics manufacturing business. This is the electronics distri¬ 
bution and service industry, whose distributors, jobbers, dealers, serv¬ 
icemen, and others do an estimated volume of $3 billion annually— 
a business which did not exist a few years ago, and which has multi¬ 
plied manyfold since the war. 

These are the ramifications of mechanization. It is not a case of 
putting a machine to work in 1 plant, or 2 plants. It is a case of 
creating an entire set of industries, hundreds of thousands of jobs that 
did not exist, millions of dollars ox personal income, of buying power, 
new lifeblood for the entire economy. 

THE GROWTH OF THE ELECTRONICS INDUSTRY—“the world’s MOST 
PROMISING TECHNOLOGICAL REVOLUTION” 

If there ever were an industry which owes its unprecedented growth, 
its enormous productivity, and its great potential to mechanization, 
it is the electronics industry. To be sure, this amazing growth over 
the span of a few short years would not have been possible without 
rapid strides in the science and engineering of electronics, but ad¬ 
vances in the state of the art, no matter how impressive they may be, 
are in effect meaningless unless they can be translated into the satis¬ 
faction of human needs. That was and is the contribution of the 
machine; it translates the ideas of man into end products within the 
reach of a steadily increasing number of people. 

Not many years ago, as recent as the 1930’s and the years immediate¬ 
ly before the war, the electronics industry, as such, did not exist. It 
was essentially the radio business, receivers, tubes, and other com¬ 
ponents, transmitting equipment, and broadcasting. But there was 
no microwave communication, no electronic navigational equipment 
for aircraft and ships, no electronic controls. The “billion dollar 
baby” of the industry, television, was represented by some very small- 
scale developmental work in a few laboratories. Then came World 
War II, and the needs of the fighting forces, especially in the air, 
brought the word “electronics” into the common vocabulary. 

MECHANIZATION VITAL TO MILI TARY NEEDS 

The requirements of the armed services were not only met but fre¬ 
quently anticipated far in advance by the scientists and engineers in 
electronics laboratories. Especially in the early stages of develop¬ 
ment, much of this revolutionary equipment was assembled, by hand. 
But the hearts of the equipment—the countless types of vacuum 
tubes—were another story. They were the products of highly intri¬ 
cate machines; without the machines they would not have been 
available. 

As the war progressed the now famous proximity fuse was de¬ 
veloped. Again, its heart was the vacuum tube, an electron tube 
capable of being shot out of a gun as the vital part of a projectile, the 
tube which causes the shell to burst at just the right distance from 
the target. Then came many other types of tubes, tubes no bigger than 
the stub of a pencil, yet able to withstand great shock and vibration, 


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as the hearts of communications, navigation, gunnery, and countless 
other applications. 

I have here a few of them. You will see they don’t resemble very 
much the tubes you are used to thinking of as a radio tube. I was 
going to bring some smaller ones for you, Mr. Chairman, but I find 
that they become classified as they get to a certain smallness, and I 
was not able to bring them to you. 

Let me tell you about one of these tubes. During the latter part 
of World War II, when the armed services’ demand for the early ver¬ 
sion of this electron tube was at its peak, Sylvania employed nearly 
15,000 people on this 1 project alone. And that was with the ma¬ 
chines that were then available. Even with this splendid and highly 
efficient working force, national defense needs could not have been 
met without a high degree of mechanization, not only from the stand¬ 
point of production volume, but from the standpoint of duplicating 
exactly the performance characteristics of a product in each one of 
hundreds of thousands produced daily. If the United States were 
to be forced into a period of rapid defense buildup, or a shooting war, 
the services have become so greatly electronified that their require¬ 
ments for this type of tube would require an employment of probably 
20 or even 25 times that 15,000 employed by Sylvania in 1945, assum¬ 
ing no progress in mechanization since 1945. However, the rate of 
mechanization throughout the electronics industry in electron tube 
manufacturing has been so rapid in the past 10 years that new and 
improved machines would eliminate any necessity for a labor force 
of 200,000 or 300,000, or even more. In other words, mechanization 
would prevent a disastrous labor shortage. In fact, I dare say that 
the arpied services’ far greater needs for certain types of electronic 
devices would be met by fewer people than were needed 10 years ago— 
that is, fewer people for the specific job. There are so many total jobs 
that the total number of people required would, of course, still be 
very much greater, but for the specific job, fewer people would be 
needed to make even the very, very many more tubes that would be 
required. 

RECEIVING TUBES ARE HEART OF ELECTRONIC EQUIPMENT 

All of these tubes belong to the family known as the receiving tube— 
the tubes which 30 years ago were the heart of your 1-tube radio sets, 
and which today are vital to television sets; computers, which are 
indispensable tools of this electronic age; microwave telephone and 
telegraph networks, and the countless other uses of electronics. I 
dwell on this receiving tube because it is a good instance of this auto¬ 
mation and mechanization problem. 

The machines which produce receiving tubes are a marvel of in¬ 
genuity (fig. 2). That picture is also a marvel of ingenuity because 
it doesn’t give away the trade secrets behind the picture. 

With unbelievable accuracy, they take the various metallic and 
glass components and within a few seconds produce a tube without 
which some vital job cannot be done. The total ouput of a single 
manufacturing plant today is greater than the entire electronics in¬ 
dustry before the war. Sylvania is 1 of the 2 largest receiving- 
tube producers in the industry, and our output in a single week 


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far exceeds a million tubes. Since we made our first tube in the early 
1920’s we have produced many more than a billion of them (fig. 3). 
You can obtain an even better indication of this growth when I tell 
you that our receiving-tube business alone is nearly four times greater 
today than our companywide sales in 1941, which then included not 
only tubes but also a line of lighting products as well. 


SUVftRIA 

TOTAL COMPANY SALES* 1941 



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That bar on the left indicates our business total in 1941. The cen¬ 
ter bar represents approximately our receiving-tube business in 1955, 
and you will see that it is three times as large. The bar on the right 
shows our television-picture tube business, and you will see that it, 
again, is twice as large as our total business in 1941, so those 2 products 
alone represent 5 times as much business as we had total in 1941. It 
gives you some indication of how the market has expanded for that 
type of product, because this business was not taken away from any¬ 
body else. This is new business that nobody had in 1941. 

Coincident with this steady increase in production have come two 
consumer benefits which are obviously of paramount importance— 
lower prices and constantly improved quality. 

Jn giving you this example, I would like to point out that I read 
with considerable interest Mr. Walter Reuther’s testimony yester¬ 
day, as reported in the Evening Star of last night, and one of the 
things he is reported as having said is that “Congress should investi- 

E ,te the pricing policies of big corporations because,” he said, “the 
nefits of rising productivity are not being passed on to consumers.” 
Perhaps in IMS’. Walter Reuther’s mind we are not a big company. 
That would probably eliminate us from being included in his state¬ 
ment, but here are some facts of life: 

In the early 1930’s a typical receiving tube for a radio set cost $6.20. 
That is the cost if you went in and bought it. If you had someone in¬ 
stall it, it mightdiave cost you more. A typical tube today, if there 
is such a thing, performs a far better job for a longer length of time 
and costs the consumer about $1.50. That is a reduction of three- 
fourths, a little more. 

Now, all this is in spite of the fact that the average direct labor 
rate in receiving-tube manufacturing has increased from 34 cents an 
hour in 1933 to some 5 times that amount today, so the worker gets 
5 times as much money. We get one-fourth as much for the product, 
and now I will give you a little story about profits. 

That $6.20 time had a profit of over 25 cents in it. The $1.50 tube 
has a profit of perhaps a nickel. Of course, we are making a lot more 
of them, but if we didn’t pass that lower cost of manufacturing on to 
the consumer then it must be the referee that is beating us to death 
because we certainly haven’t got it. We are making less than a nickel 
apiece on that tube today. 

That adds up to a lot of money, and don’t let me leave you with the 
impression that receiving tubes, total dollars, are a small-scale busi¬ 
ness. 

The typical receiving tube today not only does a better job for less 
money than its counterpart of several years ago, but in many instances 
it does a job that could not be done at all a few years ago. High as 
production rates may currently be, and convenient though it may be 
to produce tube types which have become commonplace to the indus¬ 
try, new types are constantly being introduced to do something which 
has never been done before. 

MECHANIZATION BROUGHT TELEVISION TO 35 MILLION HOMES 

Still another electronic product which would not be possible with¬ 
out automatic and semiautomatic equipment is the television picture 


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tube, a device which could be found in only a few thousand homes 7 or 
8 yeai*s ago, but which today brings entertainment, education, and 
information to 35 million homes. Again this area of our business i9 
today larger than our total company sales just before the war. 

Here are several photographs showing various stages of production 
in the business of making television picture tubes. That first one is 
an aluminizing machine, and is probably the most highly automatic 
aluminizing machine in the industry (fig. 5). 



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That man is standing at the control panel of a fully automatic screen¬ 
settling machine in the manufacture of television picture tubes. He 
punches buttons when he wants the machine and the conveyor lines 
to do various things at various speeds (fig. 6). 



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This is the final electrical test on the line. As they go down there, 
they are being tested automatically. That fellow who is standing 



there is an engineer, who is explaining to one of the supervisors or 
employees about the machine itself. 


THE STATUS OF COLOR TELEVISION 

The current status of color television is a striking example of the 
importance of mechanization. One of the major obstacles to the 
widespread availability of color television is the high cost of a tele¬ 
vision set. This cost will not be reduced to a point where the set is 
within the reach of a large segment of the public until the cost of 
producing the various components can be greatly reduced. New au¬ 
tomatic machines are needed, for example, to put the thousands of 
color dots on the face of the tube, and these machines must apply these 
dots repetitively, at consistently high quality standards, and at high 
volume. I am happy to say that such machines are now under devel¬ 
opment in Sylvania’s laboratories. 

The most expensive component is the color TV tube. When I tell 
you you have to lay accurately on the face of a color television picture 
tube hundreds of thousands of separate and individual dots, of three 
different colors of phosphors, and have each group of three in the 
exact relationship to each other that the next group of three is, so 
that when an electronic beam hits the blue dot it also hits the blue dot 
in the group next door, you have some idea of the complexity and the 
cost of building such a thing. 

Until this is done mechanically, automatically, the cost of color TV 
sets is not likely to come down where the color TV sets are available 


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AUTOMATION AND TECHNOLOGICAL CHANGE 179 

to a large number of the public. I am happy to say such sets are under 
development in Sylvania’s laboratories. 

Here, then, you have a relatively small device, the receiving tube r 
and the picture tube, heavy and bulky enough to be difficult for a man 
to carry, both of them mass-produced items, both of them compara¬ 
tively new from the standpoint of the jobs they are required to do, 
and both of them the results of mechanization. 

THE FLUORESCENT LAMP 

Back in 1938 Sylvania introduced a new product, the fluorescent 
lamp. There was no fluorescent lamp industry at that time; the 
fluorescent lamp was, in effect, a laboratory device. From this begin¬ 
ning 17 years ago an entirely new industry has grown, not an indus¬ 
try which supplanted the incandescent lamp industry, but which 
grew along with it (fig. 7). Here in this photograph is a portion of 
our fluorescent lamp plant in Danvers, Mass. None of these jobs 
existed 17 years ago, nor any of the nearly 1,000 others at this plant. 



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Let me repeat: All of those jobs that you see in that picture, and a 
thousand more like them in the same factory, are jobs that did not 
exist in 1938 at all. So those machines didn’t take jobs away from 
anybody. They created new jobs. 

To snow you what is happening in this business, our fluorescent 
lamp production per operator-hour in 1940 was 3.4, a little less than 
three and a half lamps per operator-hour. Today the equivalent 
figure is above 50. I would rather not give you the exact figures 
because our competition would like very much to know how fast we 
are making them, but I firmly believe that within the next 5 years 
the production per operator-hour will have to more than double again, 
if we are to keep pace with greater public demand for our product. 
An enormous expansion in lighting will take place during the next 
several years, and mechanization will be the only way to meet that 
demand. 

Although the receiving tube business is one of Sylvania’s oldest 

{ iroduct lines, two of the products I have mentioned—fluorescent 
amps and TV picture tubes—represent relatively new products whose 
introduction and growth to the substantial position they now hold 
would not have been possible without mechanization. 

I might add a third product, photoflash bulbs. The point, however, 
is this: Mechanization has not only greatly broadened our business in 
such original lines as incandescent lamps and receiving tubes, but has 
permitted us to enter entirely new lines of business, every one of which 
either equals or surpasses our total sales of 15 years ago. 

ELECTRONICS: A $9} BILLION INDUSTRY FROM MECHANIZATION 

Other companies in the electronics industry have equally impressive 
stories to tell. Some of them are large organizations with consider¬ 
able diversity of product, whereas others specialize in perhaps 1 or 2 
components or in some very intricate device, such as the magnetron 
tube. In total, however, all of us represent an industry with a total 
annual volume of some nine and one-half billion dollars, employing 
more than 700,000 persons. A decade and a half ago, annual volume 
was about $500 million, and employment of about one-tenth of what 
we have today (fig. 8). 

The bar chart and the lines are actually drawn to scale on that chart, 
and therefore, it proves that employment has grown as rapidly as 
the industry. 

Keep in mind that those are not solely production workers. Those 
are the distribution workers, salesmen, broadcasters, and so forth, 
everybody who is employed in this electronics industry, whether he is 
a production worker or not. 

The Chairman. Does that include the local serviceman? 

Mr. Mitchell. Yes; it includes servicemen as well. This is the 
entire industry. 

Now, obviously, the growth of production workers alone in the 
plants wouldn’t be as rapid as that. That $914 billion in annual sales 
and revenues includes Government purchases, most of it for the armed 
services. It includes TV and radio transmitting equipment, TV and 
radio receivers, components, industrial and commercial equipment and 
devices, distribution, service, and the vast broadcasting industry. 
Each of these areas has a strong growth potential, but without ques- 


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SMits a Revenues 
in an l ion j 


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GROWTH OF ELECTRONICS INDUSTRY 
1940 - 1965 

VOLUME a EMPLOYMENT 


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in mil Lions 

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tion the field with the greatest fertility is industrial and commercial 
electronics—the application of the vacuum tube and all of its attend¬ 
ant devices to mass production, to business communications, to trans¬ 
portation. So broad is the horizon, in fact, that the most conservative 
estimates are that the electronics industry will attain an annual 
volume of $15 billion, or perhaps more, by 1960, and $20 billion by 1964 
to 1965, with employment exceeding 1 million people. Think of it. 
An industry which has doubled in the postwar years, will double again 
within the next decade. 

Let me hasten to add that these predictions are not wishful thinking 
or crystal-ball gazing.' They are based on realistic projections of 
current trends, population growth, formation of new families, indus¬ 
trial expansion, and other predictable factors. If anything, these 
predictions are on the conservative side, and the next year may well 
find us revising our estimates upward. 

One extremely important consideration in making such appraisals 
of the years ahead is a continuation of the trend in mechanization and 
automation. 

INCREASED MECHANIZATION RATE INEVITABLE 


It is our frank opinion at Sylvania that the momentum of tech¬ 
nological advances in the art of mass production is such that con¬ 
tinued mechanization on even a broader scale is inevitable in the 
years ahead. Whether you have in mind 100 percent mechanization 
of a single given process, or partial mechanization, finding better ways 
of doing things is a human trait which cannot be erased. The human 
mind has & habit of not standing still, and not accepting the way 
things are done today as the only answer. 

As I indicated earlier, and as many speakers on the subject of auto¬ 
mation have pointed out in recent months, increased mechanization 
is the only answer to satisfying the human needs which increase day 
after day. Let us assume that by some fiat techonolgical advances were 


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stopped dead in their tracks. The needs of this Nation are expanding 
so steadily that within a very short period of time we would be con¬ 
fronted with a peacetime phenomenon we have never encountered 
before over any period of time—a serious labor shortage. 

ONLY INCREASED MECHANIZATION RATE WILL MEET HUMAN NEEDS 

I not only do not even remotely fear that mechanization or auto¬ 
mation will cause long-term unemployment, but I am concerned about 
the strong possibility of a labor shortage in the years ahead, unless 
the rate of mechanization is increased. 

The past gives us a good clue to the future. As reported by the Joint 
Committee on the Economic Keport, and the United States Depart¬ 
ment of Labor, at year end 1947, some 44 million persons were em¬ 
ployed in industry; in 1954, 50 million were employed. If production 
techniques had not progressed between 1947 and 1954, 58 million per¬ 
sons would have been required to produce the goods and services 
actually demanded in 1954. The American population simply could 
not have furnished that working force. Without increased mechani¬ 
zation, without laborsaving devices, and overall greater production 
efficiency, the public’s needs simply would not have been met. 

TRENDS IN 

GROSS NATIONAL PRODUCT 



Now, let us look at the future. I recently read a survey in Factory 
Management and Maintenance magazine in which a gross national 
product of $850 billion was predicted for 1975; as shown on the chart. 
Now, unless you buy the fact that it is possible to have that gross na¬ 
tional product of $850 billion by 1975, then the rest of my argument 
is specious, but I believe that high a gross national product of that 
magnitude is possible, and I believe we will have it. 

Our gross national product will be this year about $382 billion. 
Factory and Management Maintenance also predicted a working force 
in 1975 of 82 million people against 64 million people today. They 
point out if the present rate of automation continues, every available 


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worker will have to be putting in 40 hours per week, in order to keep 
raising our standard of living at the rate it is being increased now. 
The entire Nation’s long-term goal of a shorter workweek would be 
impossible. If Mr. Reuther wants the 32-hour workweek, which he 
says he does as quoted in yesterday’s newspaper, then we had better 
get on the ball and speed up automation because if we don’t, he can¬ 
not have it. A 32-hour workweek, for example, would require an 
estimated 105 million persons, and that large a force will not exist. 

There is no question but that the rate of mechanization will have 
to be increased if we are to realize its ambitions of both a steadily 
rising standard of living and a shorter workweek. 

Perhaps because we are a growing company in an expanding field, 
but also because I am sure that the unions see throughout Sylvania 
many examples of the creation of broader job opportunities through 
high mechanization, I know of no instance of any difficulties with our 
various unions through our introduction of new machines. The 
unions know as well as we do that increased mechanization at Syl¬ 
vania has given us the competitive strength to create broader mark¬ 
ets for our goods—and that means more jobs and more security. 

With your permission ? Mr. Chairman, I would like to say a word or 
two about decentralization. You have asked me something about it 
earlier. 

The Chairman. Yes, sir; we are interested in that. Where are 
your plants located principally ? 

Mr. Mitchell. (Fig. 10). That is a pretty small map, but you can 
see that they are concentrated in two main spots. There are 11 of 
them in New England, 24 in Pennsylvania, 15 in New York. Then 
they go out through the Middle West and aown into the South, and 
there are three on the west coast. 

The Chairman.. I am acquainted with your company because I 
always listen to Mr. Collier and his program Beat the Clock. 

Mr. Mitchell. Thank you for that plug, Congressman. I ap¬ 
preciate it. 

DECENTRALIZATION : KEY TO PROGRESS 

I should like to discuss two situations in Sylvania which are indica¬ 
tive of what is going on throughout the electrical-electronics indus¬ 
try. One is the philosophy of organization known as decentraliza¬ 
tion, and the other is the steadily increased use of automatic equip¬ 
ment in data processing. The only difference between decentraliza¬ 
tion, as we see it, and as others preach it, is that some people have 
gotten the idea that decentralization means physical dispersion. 

Now, it happens, too, in our case, but can you decentralize without 
physically dispersing? Decentralization is a philosophy of manage¬ 
ment which means that you pass on authority and responsibility down 
the line, and really require your executives at lower levels to do the 
complete job, themselves, and be responsible for everything, includ¬ 
ing profits. 

If I had to personally make decisions on everything that goes on in 
those 43 plants, 16 laboratories, and 15 warehouses, I wouldn’t be able 
to be here today, sir, givirg this testimony. It is only because we 
really practice decentralization that it becomes possible for one man 
to attempt to manage a corporation of that size. 


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Now, we claim that decentralization would not be possible without 
mechanization. We favor small plants in small towns. We favor 
them for many reasons. We believe that one man cannot know in¬ 
dividually more than several hundred people in one plant. He can¬ 
not go through the plant and call them by their first names, Tom, Joe, 
Harry, and he cannot really know what they are doing in his fac¬ 
tory, if there are many more than six or seven hundred, so we put a 
theoretical limit, which factors beyond our control cause us to violate 
every once in a while, of about 700 people, and it averages out about 
that. We have 26,000 employees in 43 plants and other installations 
so we are not far off our goal as an average, but if we put some of 
these factories in the small towns they are in now, such as Nelsonville, 
Ohio, or Burlington, Iowa, or Shawnee, Okla., or Fullerton, Calif., 
if we didn’t have them highly mechanized, we couldn’t put them in 
the small towns because the small towns wouldn’t deliver a labor force 
big enough to let us have them. We would have to draw from the 
farms around and the transportation problem would be too great. 
So we do say that decentralization, as we run it, could not be accom¬ 
plished without mechanizat 'on. These are highly mechanized plants, 
with few employees, with a small supervisory force watching over 
them. 

The manager of such an operation, in effect, has a separate business, 
and he runs it subject only to the broad framework of general policies 
and controls which must be retained by top management in order to 
assure coordinated action. Knowing that he has the responsibility 
for the success of that local plant, and that he has the necessary 
authority to do the job, that manager has the same sense of pride as if 
he personally owned every square inch of that plant. And that pride 
is strikingly evident in everything that he does. 

Moreover, that point of view permeates right on down through his 
entire organization. Everyone in the plant, from the receptionist at 
the front door, to the shipping clerks at the back, know that the local 
manager is running the plant, and not some main office a thousand 
miles away. They see that what they do has a direct effect on what 
he does, and they proceed to identify themselves directly with the 
success of that operation. 

When you walk through the plant, you see in a moment what the 
attitude is. The first names, inquiring about the family, discussing 
some new machine as if they had paid for it themselves—not simply 
acting interested because the book says you should, but rather because 
you are interested—these are the symptoms of a healthy situation. 

A DECENTRALIZED PLANT STRENGTHENS COMMUNITY PRIDE 

This sets off a sort of chain reaction which extends from the plant 
out into the community. A decentralized plant, operated as an inte¬ 
gral part of the community, seems to breed a certain point of view— 
an awareness of community responsibilities and a desire to do some¬ 
thing about them. Whether it is a fund-raising campaign for a new 
church, or the community chest, or anything else, everyone seems 
to get behind them and views them as part of his individual 
responsibility. 

Aside from the obvious advantages from a human relations stand¬ 
point, which are sufficient reasons in themselves for decentralization, 


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what are the other benefits? There is no question but that a decen¬ 
tralized plant, making a product which lends itself to decentraliza¬ 
tion—ana there are plenty of them in the electrical-electronics indus¬ 
try—is more efficient than one operating under centralized authority 
and responsibility. This is the reason: It is more efficient because 
everyone wants it to be. The working force at that plant doesn’t 
work any harder, but it does work more effectively. It isn’t the 
machine that does it; the machine only makes it possible for us to 
set up an autonomous operation. The point of view of the employees, 
from the manager on down, the attitude—that is the key to the 
situation. 

SOME LIMITS TO DECENTRALIZATION 

We sincerely do not know how far a company can go in decentraliz¬ 
ing. A great deal depends on its products, for example. Obviously, 
a producer of heavy equipment would find it difficult to decentralize 
the way we have, because we can break up our operations into units, 
and he cannot. Likewise, the mass production of automobiles would 
not seem to lend itself to decentralization into many small plants, 
although the production of components and subassemblies certainly 
could be. 

Be that as it may, we know that Sylvania could not have decen¬ 
tralized without mechanization. And we also know that wonders can 
be worked by several hundred skilled people, operating highly com¬ 
plex machines, in a decentralized plant, in a small or medium-sized 
town, when that one plant does not dominate the community. The 
resultant consistently high quality of product, and overall competitive 
costs, are vital to a company’s continued growth and prosperity— 
and that means expanding opportunities for employment. 

Without mechanization we would never have been able to take our 
work to many small communities because their labor force would 
have been inadequate. We would have had to build our plants in 
large industrial centers, instead of Shawnee, Okla., or Burlington, 
Iowa, or Fullerton, Calif. 

Suffice it to say that the employees in a decentralized plant don’t 
work any harder, but they work more effectively. A pitcher works 
just as hard throwing a wild pitch as he does a strike. 

Yes, Sylvania is sold on decentralization. We think that it is good 
for the company, for the employees, for the communities, and for 
our customers. It represents a blending of the advantages of mass 
production without submerging the individual in the process. Call 
it “maintaining the identity of the individual.” That seems to be 
sufficient reason in itself for decentralization. 


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Here is a typical example (fig. 11). Some of you won’t think that is 
a very small plant, but that one is in Williamsport, Pa. It has about 
600 workers, and they are all supplied from that area. 


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That one is Ottawa, Ohio (fig. 12). It is a picture-tube plant, and 
unfortunately, over a thousand workers, because the picture-tube 
business got too big. We couldn’t build a new plant fast enough, so 
it has a thousand people in it. It was built to have 600. 


45006 0—59-13 


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Now, we believe that the combination of further mechanization and 
further decentralization is going to help us arrive at the goal where 
small towns, or smaller communities can have their own industrial 
plants—where labor, the younger fellows and gals, are not drained 
away from these small towns to work in larger cities, and we think it 
is for the general good of everybody to be able to work in a smaller 
community, where commuting is not necessary and where you can 
live 10 or 15 miles from your work and perhaps live in a spot where 
you can have a little garden plot of your own, and so forth. 

That is the basic philosophy of our decentralization program, and 
I will show you now what we are doing to carry mechanization one 
step further to make decentralization and mechanization really pos¬ 
sible, and that is, we are going to automate the figure part of the busi¬ 
ness, the clerical part of the business. 

stlvania’s data processing system 

And now, in conclusion, I should like to report briefly on a new 
project at Sylvania which represents a form of pioneering in the use 
of automatic equipment. It is our new data processing system, the 
headquarters of which is now under construction in the little town of 
Camillus, just outside Syracuse, N. Y. (fig. 14). A nationwide 12,000- 



mile private electronic communications system, engineered jointly by 
Sylvania and Western Union, will link 51 cities with the data process¬ 
ing center at Syracuse. These specialized communications facilities 
will tie together all of our plants, laboratories, sales offices, ware¬ 
houses, divisional headquarters, and executive offices. These various 
installations will feed financial and production information over the 




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leased network to the center, where it will be instantly summarized 
for all levels of management. 

The heart of the center will be a Uni vac machine which we will 
lease from the Sperry-Kand Corp. (fig. 14). The giant electronic 
brain will convert a wide variety of information into summarized data 
on which can be based decisions by management at the corporate, divi¬ 
sional, and plant level. Jt will gather, record, compute, and classify 
information concerning production volume, sales, billing, and many 
other activities. Ana as we gain experience we fully expect to 
broaden its activities to such areas as market research, engineering 
analysis, and other fields. 

Western Union, Sperry-Rand, and Sylvania look upon this new 
project as a revolutionary step in industrial communications. It is^ as 
far as we know, the 9 nly existing concept of an entire company tied 
together communicationswise from a data processing standpoint, and 
with that function housed in its own facility. Of equal significance 
is the fact that this project in administrative automation will be of 
tremendous value to an operating organization whose very foundation 
is mechanization and automation. Here, too, will be a centralized 
facility making even more effective a fully decentralized operating 
organization. 

I should like to emphasize that ingenious as it is, Univac cannot 
think. It can only give out what somebody has put into it in the 
first place. 'It does the process of manipulating that information very 
rapidly, butxit cannot think; only human beings think; only human 
beings make things. 

Our contention is*SMr. Chairman, that if we are going to continue 
to increase the standard of living of this country at the rate that it 
has been increased in the past few years, then several things are 
necessary: 

(1) We believe that mechanization must continue to make new jobs 
faster than it takes people off old ones. So far that has happened, 
and it is the creation of the new job that is likely to cause the labor 
shortage that I am worried about in the next 20 years, rather than 
the army of unemployed which some people fear as of that time. 

(2) We feel that unless the rate of automation is greatly increased, 
we will not have a large enough working force in the future to con¬ 
tinue the rate at which we have been raising our standard of living. 

(3) Far from deploring automation, we should encourage it to 
increase at a rate we have never before attained. 

Just when I entered the room, Mr. Moore asked me a question which 
I would like to enlarge upon, and you touched on it yourself, Mr. 
Chairman, and that is the automation, or the automatic assembly of 
such things as radio sets. It is rapidly coming. Several of us have 
automatic machines today which we feel will ultimately produce, with 
a fraction of our present working force, enough small table model 
radios to take care of at least 50 percent of what this country uses in 
a year. 

Offhand, it might seem that a tremendous number of people would 
be thrown out of work. 

Well, there are some compensating factors that you must take into 
consideration. An automatic assembly machine of that kind, spews 
out an awful lot of radio sets,^ but every one is like the one before, 


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and not everybody wants every radio exactly the same color, shape, 
size, and style. They want different ones. Therefore, you can’t afford 
to set up an automatic machine, to spew out that many radios of the 
same kind at the same time, so it becomes more expensive to make them 
this way than it does to make them the way that we are making them 
today, so we don’t make complete units. We make perhaps a little 
part, which is common to very many television or radio sets, called 
an assembly, and we can make that thing in great quantities, and 
supply it to many small assemblies of television and radio sets who 
could not make their own assemblies. That is the way the industry is 
developing. 

Do not get a picture of a great funnel at one end of a machine into 
which you pour raw materials and out of which at the other end 
comes a completely assembled device. We won’t live to see that 
today, and I doubt mat our children do. 

Automation comes in bits and pieces. First the automating of a 
single process, and then gradually a tying together of several proc¬ 
esses to get a group or subassembly complete. 

I think I will end there and see if you have any questions, sir. 

The Chairman. I have certainly enjoyed your testimony, Mr. 
Mitchell. I know very little about this very complicated and impor¬ 
tant problem, but I am learning a great deal about it. 

Your testimony states that the industry which has doubled in the 
postwar years will double again within the next decade, that is by 
1965. 

Mr. Mit chell . Yes, sir. 

The Chairman. By 1965 the estimate is that we will have 190 mil¬ 
lion people. What is your estimate of population by 1975? 

Mr. Mitchell. About 225. 

The Chairman. About 225 million people. 

Mr. Mitchell. Yes, sir. 

The Chairman. I notice that you state that you are in agreement 
with the estimate that has been made that we will have an $850 
billion gross national product by 1975. 

Well, what percentage a year will that be ? 

Mr. Mitchell. Well, let’s see. It has 20 years to do it in. 

The Chairman. Without allowing for the effect of compound in¬ 
terest, that would be more than 5 percent, since it will be more than 
double. Bight now we have less than 400. 

Mr. Mitchell. Yes, sir. It will be more than 5 pe rcent? 

The Chairman. It will be more than 5 percent. Will it be as much 
as 6 percent? 

Mr. Mitchell. Pretty close. 

The Chairman. It will be pretty dose to 6 percent. That is the 
highest estimate we have had of the increase m Hie gross national 
product. 

Mr. Mitchell. The reason I believe it ? Mr. Chairman, is that every 
time that you build an automatic machine, the thing opens up new 
vistas of things you can do with it, and products that you can make 
available, that you never dreamed of before, and if you believe, as I 
do, that the human being never becomes saturated with things— 
there are always other things he wants, if he can afford to Duy 
them—then I say that this rate of increase can increase by that 
amount, by that time. 


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The Chairman. What is your prediction on the workweek for, say, 
1965? 

Mr. Mitchell. Well, I gave you my prediction in 1975, and if I can 
draw a straight line between now and there, I would say that the 
problem would be partially with us in 1965—namely, that I doubt you 
can get down to a 35-hour workweek, because I think the demand for 
goods will be so great that the working force will have to work nearly 
40 hours a week to produce those goods, unless we step up even faster 
our automation process. 

I have no objection to a 35-hour workweek. I just don’t think you 
can get down to it without stepping up our rate of automation. 

The Chairman. You have the same feeling about 1975 ? 

Mr. Mitchell. Yes, sir. I believe it will be close to 40 hours. 

The Chairman. You will still have the 40-hour week ? 

Mr. Mitchell. Unless we build things faster, unless we mechanize 
faster. 

The Chairman. For the reasons that you have already stated. 

Mr. Mitchell. Of course I was brought up in the sales department, 
Mr. Chairman. Nobody can tell me that you can’t peddle this much 
goods, you see. Somebody who was brought up in production might 
doubt that you could sell that much output. 

The Chairman. Do you depend on installment bilying for distribu¬ 
tion of your products ? 

Mr. Mitchell. Yes, sir. 

The Chairman. What percentage of your products would be dis¬ 
tributed through installment buying? 

Mr. Mitchell. I think a very small percentage of our own, sir. Our 
TV business is only about 15 percent of our total, and most of our 
other products are sold for cash. 

The Chairman. It is only the TV part that would depend upon in¬ 
stallment credit to any great extent, then ? 

Mr. Mitchell. Yes, sir. 

The Chairman. When do you predict we will have in general use 
the colored television ? 

Mr. Mitchell. Well, sir, I am a conservative on that, because I want 
to see the colored TV set be one that you and I can operate without 
an engineer standing over our shoulder when it comes about. It is 
here today. I have one in my living room. It only costs too much, and 
it is a little too complicated to time 1 . I would say that you will begin 
to see them in quantity at the end of 1956, and I believe that 1957 
will be the first year when what we would call large quantities will 
be sold. If you want to know the price, I think it will have to be $500 
or less before enough people will buy them. . . .• • 

The Chairman. Senator Watkins’ administrative assistant would 
like to ask you some questions. 

Mr. Frischknecht. Mr. Mitchell, Senator Watkins is a member of 
this committee. He is in Utah at the present time. This is the first 
t.imft the Senator has been in the State for 2 .or 3 years. At this 
time last year he was busily engaged in a senatorial assignment; there¬ 
fore this is the first opportunity he has had to get out home for a 
needed vacation and to meet the people and ascertain their problems. 
He is on his way today, I think, to the National Reclamation Associ¬ 
ation convention in the Midwest, and for that reason cannot be here. 


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Senator Watkins asked me to attend the hearings in his place, and 
the chairman of the subcommittee has been gracious enough to permit 
me on behalf of Senator Watkins to ask the witnesses appearing before 
the committee a few questions. 

I was most interested in your observation that as far as Sylvania’s 
productive processes are concerned, about 70 percent of your employees 
are women. 

Mr. Mitchell. Yes, sir. 

Mr. Frischknecht. Then as far as displacement of workers is con¬ 
cerned, through the introduction of some of this excellent and very 
astonishing automatic equipment you told us about this morning, you 
really haven’t too great a problem as far as your own company is 
concerned? 

Mr. Mitchell. No. Well, remember, now, there are two reasons 
why we have it. One is perhaps that a large percentage of them are 
women, and, therefore, our personnel turnover is larger. The second 
reason is that the industry has grown so fast that we can absorb almost 
anybody we can hire. 

Mr. Frischknecht. Has this problem reached such proportions 
that Sylvania has had to establish a retraining program? jDo you 
have a current retraining program? 

Mr. Mitchell. In individual plants, yes. 

Mr. Frischknecht. In individual plants, where you are in the 
process of new adaptation? 

Mr. Mitchell. Yes, sir. 

Mr. Frischknecht. Is this generally true of the industry? 

Mr. Mitchell. I would think to a degree; yes, sir. 

Mr. Frischknecht. I was also interested- 

Mr. Mitchell. I hope we are a little ahead of them. 

Mr. Frischknecht. I was also interested in your observation that 
rather than automation ever resulting in too many unemployed indi¬ 
viduals, actually automation itself may result in a deficit in the num¬ 
ber of employees available for future employment. 

I was also impressed by your observation that as far as your industry 
is concerned, the introduction of automatic equipment has resulted 
in decreased prices, and an increase in quality ana an increase in the 
quantity of your products available to the public. 

Mr. Mitchell. Could I add one that I forgot to say in my testi¬ 
mony ? One of the greatest costs in the electronics industry is, believe 
it or not, sheer waste, a thing that we call in the industry shrinkage). 
We put dollars worth of raw materials into one of these big picture 
tubes and if it isn’t right when this comes off the last process, the 
whole thing goes into the scrap pile, except for the glass envelope 
which we wash out and try to start off again. 

This shrinkage is the greatest single menace of the industry. 

The amazing thing is that fully automatic machines don’t make 
shrinkage. The machine stops when you put a bad part or bad process 
in, so you tend toward the time where every unit that comes off the end 
of the line, off the completely automatic machine, is a good product. 
This doesn’t hurt anybody. This is the elimination of waste. 

Mr. Frischknecht. This is a factor resulting in lower per unit 
costs. 

Mr. Mitchell. Yes, sir. 


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Mr. Feischknecht. Resulting in lower prices to consumers. 

Mr. Mitchell. Yes, sir. 

Mr. Feischknecht. You also mentioned that as of this date your 
firm has had no difficulty with labor unions, over problems created by 
automation. 

Mr. Mitchell. No, sir. 

Mr. Feischknecht. With respect to automation. 

Mr. Mitchell. No, sir. In respect to automatic machinery. We 
have had a few little bones of contention in other regards, as does any 
company. 

Mr. Feischknecht. My reference is purely to problems as a result 
Of automation. 

I was particularly interested in the description you gave of your 
plant dispersal program—called decentralization by some, relocation 
by other authorities on administration and management. 

You indicated something about new employment opportunities in 
rural areas. Do you think this might be one reason, not due just to 
your plant or your firm’s operating this way but the fact that many 
other industries, and many other firms, are utilizing this dispersal 
method also, why we find fewer farmers today? We have steadily 
experienced a decline in the number of people in agriculture. We 
haven’t found a corresponding decline in the number of people leav¬ 
ing rural areas. Do you think, therefore, that there is a possibility 
that many of these farmers or people who were farmers at one time 
have gradually been absorbed in plants such as those you have located 
in the South, the Midwest, and California ? 

Mr. Mitchell. Yes, sir; wo employ a lot of them. Some of them are 
part-time truck gardeners when they go home at night, but they don’t 
consider themselves farmers any more. They consider themselves in¬ 
dustrial workers and would be so classified. 

Mr. Feischknecht. I am glad you make that point. 

According to the census of 1950 we had out of about 5.4 million 
farmers about a million heads of farm families who worked over a 
hundred days off the farm. Many of those individuals might well be 
employees of small plants located in rural areas, such as Sylvania’s, 
may they not? 

Mr. Mitchell. Yes, sir. We give local plants their local choice 
as to what hours they would like to work. We open many of our 
plants in farm areas at 7 o’clock in the morning, so they can get 
through at 3 in the afternoon, and then they go home and farm after 
that. 

Mr. Feischknecht. I think the members of the committee are well 
apprised of the fact that one of the main features of President Eisen¬ 
hower’s and Secretary Benson’s program for low-income farmers 
hinges right upon this very point you have made. That is the need 
for the location in the rural areas, in low-income farm areas, of plants 
such as Sylvania has built in the Midwest, California, and in the 
South. I was particularly interested to know that you nave a large 
number of plants in the Southern States, where the main areas of low- 
income farmers are located. 

Do you think the future holds much opportunity for employment 
of rural people in rural areas, in nonfarming occupations—in service 
industries and manufacturing plants such as Sylvania’s? 

Mr. Mitchell. Yes, sir. 


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Mr. Frischknecht. And would you venture ah opinion as to 
whether some of the folks leaving the farms today, or those that have 
left farms in the last decade, have been going into small rural in¬ 
dustries? 

Mr. Mitchell. Certainly they have. 

Mr. Frischknecht. Maybe that will answer the complaints critics 
of President Eisenhower’s and Secretary Benson’s farm program have 
been making that the Eisenhower farm program is driving farmers 
from the farms actually this migration has been going on for over 
80 years. 

Mr. Mitchell. I would like to say the reason industry takes these 
small plants into these small towns is to combine the economic benefits 
of mass production with the social benefits of living in small com¬ 
munities, in contrast to large industrial centers, all in all, it is a case 
of setting up your plants m a balanced community with diversified 
industry, high community pride, and with a good atmosphere to get 
a good job done. 

There is in some small towns some differentiation because living 
costs are smaller than in big cities. 

Mr. Frischknecht. One more thing, the President and Secretary 
Benson have insisted upon is that we keep rural people in rural areas, 
if they want to remain. It is desirable to keep young people in that 
type of environment. 

Mr. Mitchell. That is right. 

Mr. Frischknecht. I want to thank you very much, Mr. Mitchell, 
on behalf of Senator Watkins for your appearance here this morning. 

The Chairman. Dr. Moore, would you like to ask a question? 

Mr. Moore. No. I think, however, that Mr. Mitchell has pointed 
to one thing that we oftentimes overlook; namely, the employment¬ 
giving possibilities of the auxiliary services that grow up in the wake 
of manufacturing and new products. When we talk about automa¬ 
tion, we are a little inclined to think of the manufacturing process 
exclusively. We are inclined to forget or overlook the fact that, as in 
the case of television, there are literally thousands of local servicemen 
whose j'obs depend upon the wide use of products of the automated 
machinery. 

Mr. Mitchell. That is right. When I pose the threat of a labor 
shortage in 1975 I am including that kind of labor, not just manu¬ 
facturing labor—all the j obs. 

The Chairman. Mr. Frischknecht asked you about permitting the 
low-income farmers to work at industrial plants, and compared that 
to Secretary Benson’s program of permitting the industrial worker, 
or permitting the farmers to engage in industrial work, and supple¬ 
ment their incomes. 

I believe you stated a while ago that where people work in your plant 
and also live on a farm, they are listed as industrial workers ana not 
as farmers? 

Mr. Mitchell. I think most of those who work for us are so; yes, sir. 

The Chairman. That would be in effect getting them out of the 
farming business into industry ? 

Mr. Mitchell. I think that happened in more cases. They may 
stay farmers but don’t show up in farm statistics. 


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The Chairman. I know Henry Ford advocated that many years ago 
when he started a factory in Michigan. And, he succeeded to some 
extent. 

Mr. Mitchell. It is not possible in very many instances to run your 
plant only during those months when he cannot farm ? We have to 
run our plants through the year. We do these other things of start¬ 
ing at 7 o’clock and getting through at 3. He probably cannot be 
a full-time farmer from 3 until 8. His wife works. 

The Chairman. It is a good thing in a farming community. All 
the members of the family are not farming. Some of them are work¬ 
ing in your plant and some working on the farm. You draw your 
labor from around the surrounding countryside that way. 

Mr. Frischknecht. Mr. Mitchell, what has happened is not that 
people are being driven from agriculture by the effects of farm policies, 
past or present, but that these people are voluntarily leaving agricul¬ 
ture because they are attracted by employment in a firm such as yours 
which offers more security, higher salaries, on a more sustained basis, 
with resulting higher levels of living; isn’t that true ? 

Mr. Mitchell. I agree with that. Farming is becoming a large- 
scale venture, too, to be profitable. I mean it isn’t the large-scale 
farmer that is in tough straits financially. It is the small-scale 
farmer. 

The Chairman. That is right; the family-type farmer. 

Mr. Mitchell. That is right; he is having a tough time. 

The Chairman. Thank you very much, Mr. Mitchell. We appreci¬ 
ate your testimony. We know it will be helpful to us. 

This afternoon we have Mr. Robert C. Tait, president of Stromberg- 
Carlson Division of General Dynamics Corp., and Mr. Howard Cough¬ 
lin, president of the Office Employees International Union. 

The subcommittee will stand in recess until 2 p. m. today. 

(Whereupon, at 12:10 p. m., a recess was taken until 2 p. m. of the 
same day.) 

afternoon session 

The Chairman. The subcommittee will please come to order. We 
have as our first witness this afternoon Mr. Robert C. Tait. 

My good friend, Frank Pace, executive vice president of General 
Dynamics Corp., tells me that the Stromberg-Carlson Division, under 
your leadership, Mr. Tait, has had considerable experience and is 
making great advances in the field of electronic controls, printed 
circuits, and automatic assembly. 

When we first invited Mr. Pace to have a representative meet with 
the committee, we were particularly interested in knowing more about 
the development of and the expectations for the milling machine 
capable of producing prototype as well as production parts which 
the Convair Division of General Dynamics is reported to be building. 
While this is a little outside your Stromberg-Carlson Division, I know 
you will be able to add to our understanding of the industrial economic 
si gni ficance of all of these things, Mr. Tait. 

We are delighted to have you. You may proceed in your own way. 


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STATEMENT OF EOBEET C. TAIT, PRESIDENT, STEOMBEEG-CAEL- 

SON CO.; SENIOE VICE PRESIDENT, GENEEAL DYNAMICS COEP. 

Mr. Tait. Thank you, sir. 

I will speak about the milling machine but in a little different way, 
if I may, because we have a milling machine project of our own. 
I would rather refer to that. The Convair division milling machine 
project is temporarily suspended. We have one covering the same 
thing. 

Mr. name is Robert C. Tait, and I am president of Stromberg- 
Carlson Co. and a senior vice president of General Dynamics Corp. 
of which Stromberg-Carlson is now a division. 

As you mentioned, Frank Pace is executive vice president of General 
Dynamics. 

I suppose everyone who testifies in this hearing will first attempt 
to define what they conceive to be the meaning of the word “automa¬ 
tion,” and I hazard the guess that these definitions will vary widely. 
Some may limit the meaning of automation to a very restricted field 
and others to an extremely broad field. Only time will tell which is 
right. In my own view, automation is simply a phrase coined, I 
believe, by Del Harder oi Ford Motor Co. in describing their recent 
supermechanization which represents an extension of technological 
progress beyond what has formerly been know as mechanization. 

Some experts in this field limit the application of automation to 
control devices that involve what is known as feedback—that is, a 
system of machines and controls that is capable of adjusting its own 
operation in the direction needed to obtain a desired result, rather 
than simply following a preset cycle of operations. One of the 
earliest applications of the feedback principle is James Watt’s flyball 
governor for steam engines. Other similar long-standing applica¬ 
tions are windmills, ship-steering engines, thermostats, and so forth. 
Thus the feedback principle in itself is nothing new but the modem 
application is new in that the feedback information is handled by 
electronic means. 

Perhaps these two chartSj made up by our manager of automation 
research, and used recently in a talk he gave on this subject, may help 
to illustrate the difference between mechanization and automation as 
generally understood. 

The Chairman. You can explain them for the record, please. 

Mr. Tait. A three-set chart in which mechanization is illustrated 
by having an automatic process here, whatever the process is, through 
which a product is machined, or in one way or another processed, is 
monitored, inspected, and brought out the other end. This is all run 
by some kind of a control. Let’s say preset cams, in the case of auto¬ 
matic screw machines. Cams are set by some kind of an operator. 
They will run this thing through and the monitoring cam can be either 
automatic or human. If the monitoring is not accurate, and if the 
control is not accurate, this kind of process can run on making machine 
parts wrong indefinitely, because the cams are set wrong. 

When you get into automation you have one more factor. The 
same automatic processing, a similar type of control, and automatic 
monitoring, so the product runs through here, subject to this control, 
but the monitor immediately feeds back, and this is what I call the 


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feedback, information with respect to the accuracy, and if it is off one 
way or the other this information is immediately given to the control, 
the control changes the machine operation to correct the variance, 
and keep the product coming out exactly as it should be. 

This, I think, is very simple. It is a circle of operation, a very 
simple illustration of the difference between what we call mechaniza¬ 
tion and automation. 

The Chairman. We will insert those in the record in connection 
with your remarks. 

(The material referred to is as follows:) 

M EC HAN IZ ATIO N 



OUTPUT 


AUTOMATION 



Mr. Tait. I would like to spend just a minute on what we feel also 
are the major areas that may be affected by automation involving this 
feedback principle. 

They appear to me to be the following: No. 1, an eld one, continu¬ 
ous-flow process: This is probably the oldes&area in which automation 


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has been applied for years, principally in the oil and cheuncal 
industries. 

No. 2, the multiple-tool application: This is the one that is some¬ 
times referred to as Detroit automation, because it is best exemplified 
by the block-long machine systems that are operating in some of the 
automobile plants. Such multiple-tool systems are also operating 
in a number of other industries notably in metalworking and pack¬ 
aging. When such a system of machines performs many steps with¬ 
out human intervention, based on the feedback principle, it is gen¬ 
erally referred to as automation. When it performs iust a few 
functions on a preset pattern without employing the feedback prin¬ 
ciple it is really simply advanced mechanization. This supermech¬ 
anization referred to as Detroit automation is obviously only 
economically justifiable in connection with the mass production of 
huge quantities, where the unit volume and value are high enough 
to amortize the extremely heavy initial capital investment in the 
required specialised machinery. 

No. 3, numerical control: A good deal of work is now being done 
on the application of the feedback principle to individual machine 
tools in a maimer to provide far greater flexibility than would apply 
in the Detroit supermechanization. This is a method whereby a 
machine tool is hooked up to an electronic computer or programer 
and instructions are fed to the machine by means of punchcards or 
magnetic tape. The input contains numerical instructions ordering 
the machine tool to move, let us say, one-thousandth of an inch in this 
direction or that direction. 

This numerical control is the type of control that we refer to in this 
millin g machine, and I will have a little bit more to say about how it 
operates. 

The basic concept here is no more radical than the old-fashioned 
player piano, but the application of electronics to the system is new. 
Information is fed back to the electronic control, which automatically 
gives immediate instructions, and they are immediate, they are in¬ 
stantaneous, for correction ot any variance. Machines can be made 
to perform automatically almost any normal machine operation under 
thmprinciple. 

We have a little engineering subsidiary in Los Angeles known as 
Electronic Control Systems, which is now working on what we con¬ 
sider to be a simpler method of programing information from the 
blueprint stage to the computer or programer than now exists under 
other method! so far as we know. 

Suffice it to say here that this electronic method of applying nu¬ 
merical controls to the operation of machine tools appears to have a 
broad application to different types of machine tools and the opera¬ 
tions to be performed by them. 

No. 4, the automatic assembly of electronic components: This is a 
somewhat different application of automation whereby electronic 
components are automatically attached to printed wiring boards by a 
battery of special machines to which the components, capacitors, 
resistors and so forth, are fed. United Shoe Machinery and General 
Mills, and 1 or 2 other companies, have specialized in the develop¬ 
ment of these machines, and the automatic printed wiring board as¬ 
sembly is particularly adaptable to large-scale production of radio 
and television subassemblies. 


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No. 5, data processing: This field is comprised principally of com¬ 
puters from specialized types up to the big giant calculators such as 
Univac. These machines do mathematical jobs at unbelievable speeds, 
far beyond any human ability. Of course there are already any num¬ 
ber of jobs that are now being handled electronically or mechanically 
that simply could not be done by human labor. You are all familiar 
enough with these. 

There is no need in my taking time to enumerate a lot of them. 
There is an endless list of jobs now being performed by mechanical 
or electronical means that could not be done by human labor. Human 
labor isn’t able to do that kind of a job. 

They are not new. They are not revolutionary. They have been 
going on some time. For example, the red hot ingots, pourings, from 
a modern steel mill. The huge ladles, and so forth, with molten hot 
metal, couldn’t be handled, certainly not in that size, by human labor, 
or with that speed. That has been going on a long time. 

Of the foregoing five categories we are most interested in Nos. 3 
and 4, the numerical control of machine tools, and the automatic as¬ 
sembly of electronic components. Our engineering group out in Los 
Angeles is also much interested in the last one which I referred to as 
data processing. 

About a year ago at Stromberg-Carlson, we set up an automation re¬ 
search section headed by one of our ablest young men. Functions of 
this group were: 

1. To advise top management with respect to developments in auto¬ 
mation and their application to our particular products and manu¬ 
facturing techniques. 

2. To redesign products susceptible of automatic assembly or the 
application of other automation techniques in their manufacture. 

3. To implement the introduction of automation techniques and 
assist in training the people involved in their use. 

4. To maintain a liaison between ourselves and other divisions of 
General Dynamics Corp. as well as our own west coast operations, so 
that our processes and techniques will be compatible and coordinated 
into a general pattern. 

Our automation research section was initially staffed with personnel 
drawn from various departments within the company that would be 
affected by their program. Our research department, engineering de¬ 
partments, production engineering departments, and production de¬ 
partments all had representation in the original section, and to this 
nucleus were added qualified personnel from outside the company. 

The section was divided into three distinct groups, chemical, elec¬ 
trical, and mechanical, each with a supervisor. In addition to the 
people attached full time to the automation research section, personnel 
are called upon in other departments to lend a hand when necessary 
to implement a program as required. The work of the section is organ¬ 
ized on a project basis. If a project is largely mechanical in nature it is 
assigned to the mechanical group; if electrical or electronic it is as¬ 
signed to the electrical group, and so on. All projects are estimated 
as to cost and time schedule and are assigned numerical designations 
so that monthly financial statements can be issued according to our 
standard company procedures. 

One of the first projects of our automation group was to redesign 
one of our conventionally produced portable radios to make it possible 


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to assemble this radio by automatic insertion of most of the components 
onto a printed wiring board. 

I think 1 should say a printed wiring board is simply a method of 
printing circuitry on a plastic or bakelite board so that the connections: 
between the various points are all put in there automatically, instead 
of having a lot of wires. These are either photographically or mechan¬ 
ically produced in quantity and with the little canals of metal running 
around, that constitute the circuits. On to that printed wiring board 
are placed these resistors, capacitors, and other electronic components 
that are required in the construction of a radio or TV set, or other 
similar products—all kinds of electronic devices susceptible to that 
same kind of assembly. 

We contracted for a series of United Shoe Machinery component 
assembly machines, and now have these in our plant set up for opera¬ 
tion of this and other volume assembly products. 

It is interesting in this connection to note, however, that the entire 
direct labor cost in a manually wired and assembled radio chassis of 
this type often constitutes less than 3 percent of the selling price of the 
set. This is the direct labor cost in relation to the sales price of, 
let’s say, an ordinary radio—less than 3 percent of the selling price in 
most cases. 

The major cost of the product is in the components, and redesign 
requirements for automation must not increase these costs by even a 
fraction of a cent or the possible labor savings are more than offset. 
In other words, it might reduce this 3-percent labor cost to IY 2 percent. 
Even with fully automatic assembly to the extent of the techniques now 
known, it is not likely that this already minute labor cost will be 
reduced by more than half. 

Another current project of our automation research group is the 
application of numerical control to machine tools of all types—I don’t 
want to bore you with these, but want you to know about our 
operations. 

The Chairman. It is very interesting. 

Mr. Tait. Is the application of numerical control to machine tools 
of all types, lathes, milling machines, boring mills, drilling and 
punching machines, spot welders, and so on, that I have already men¬ 
tioned. Our automation research group is working with our west coast 
subsidiary, Electronic Control Systems, Inc., ana some machine-tool 
manufacturers, to expedite the development of our electronically con¬ 
trolled milling machine and the application of similar electronic con¬ 
trols to other forms of machine tools. 

If I may interrupt myself here, this milling machine is not unique 
as a machine. Any ordinary machine operation is subject to the same 
kind of control. The trick is the transferring of blueprint informa¬ 
tion into an electronic gadget that is in a sense a computer, in fact, 
largely a computer, that then can translate this information to the 
machine, get the feedback information, and immediately correct the 
machine, so that it can run a boring mill, or an ordinary mill, or a 
lathe, or punch press, or anything. 

In general, we are studying two kinds of numerical control—all of 
this is called numerical control in the parlance of engineering—the 
first of which we refer to as path control, which is particularly suited 
to machining processes in which the cutting tool generates a curved 


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or a straight line on a surface, as in the operation of lathes and milling 
machines. 

The second typo of numerical control might be described as dis¬ 
crete positioning—discrete being an engineering term meaning en¬ 
tirely separate and individual—discrete positioning is better suited to 
the operation of punch presses, drilling and broaching machines, spot 
welding, etc. This is the type of control that is required for trans¬ 
ferring work processes from point to point, locating very quickly and 
accurately without regard to the traversed path between points. 

You want to drill a hole or set of holes and move it over here and 
drill some more—that sort of thing. 

Although all of our work in these fields is relatively recent, par¬ 
ticularly in respect to the actual application of these automation 
techniques to our own production, it appears now that we are going 
to need all such new techniques in order to turn out the production 
that we think we see forthcoming in future. Actually, our employ¬ 
ment in Stromberg-Carlson Co. plants in Rochester alone has more 
than doubled in the past 5 years. 

I think the breadth of application of automation to the five major 
fields mentioned earlier, at the beginning of these remarks, gives some 
idea of the wide diversity of application and also supports the con¬ 
tention that the impact of such varied application cannot possibly 
be all at once. 

In other words, automation is likely to affect different industries 
at different levels at different times. Actually, I am one who believes 
that it may be a lifesaver at this particular time in our history when 
we are facing a more rapid relative increase in total population over 
the next decade than in the work force, because as you all well know, 
the big increase in population during this coming decade is going to 
take place in the very young ages and in the over-65 ages, and not 
so much in the work-force ages. 

General Electric Co. figures that by 1964 they will have to produce 
twice the volume of goods produced last year, with only 11 percent 
more people on its payroll. Adjusted for a probable decrease in 
working hours during this period, this next decade, this means that 
10 years hence General Electric (and we are comparable in a way, 
only much, much smaller) must produce about twice as much for every 
hour of work per employee as they did last year. Automation in every 
conceivable direction, from blueprint to the shipping dock, is the 
only answer to this situation. 

Carroll Boyce, associate editor of Factory magazine, has presented 
in an article entitled “What Automation Means to America’* in last 
month’s issue of Factory one of the most factual and realistic argu¬ 
ments I have yet seen m support of this thesis. He indicates that 
we face a labor shortage over the next 10 to 20 years rather than mass 
unemployment as a result of automation. 

President Colbert, of Chrysler, recently said: 

Automation * • * multiplies man’s ability to produce the goods for better 
living * * *. Only this advancing technique will make it possible to fill the 
needs of the American people for an ever-increasing quantity of goods to keep 
pace with our rising population. 

May I also call attention to the fact that automation is being 
directed largely toward, and almost entirely, as a matter of fact, 


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toward manufacturing processes, and manufacturing provides only 
about 30 percent of total employment, historically ana presently, ana 
likely to continue so in the future. In fact, it is likely perhaps to 
go down in total percentage of the whole. 

As someone else put it, automation is about 90 percent emotion and 
10 percent fact; and even if we applied all that we know about auto¬ 
matic controls, regardless of costs, only a small segment of the labor 
force would be affected. 

It might be well also to mention right here that the rate of prog¬ 
ress of automation has its own built-in feedback control, namely, the 
economics of whether the job that it might perform can pay its way 
out, for the capital investments in this field are going to be very high. 
Management can only justify them where the improved product or 
lowered cost, or combination of both, will repay the heavy initial 
capital investment over a reasonably short time. 

It is strange how technological advance in whatever form has been 
resisted over the years. There’s an 1830 cartoon on an office wall of 
General Electric that shows the dire disasters to be expected from 
the introduction of steam power in factories. It even goes so far as 
to recommend that mothers bear no more children, since the intro¬ 
duction of steam would take away any possibility of jobs for them. 

In Belgium workers would slip off their wooden shoes or sabots 
and use them to jam the machinery which was going to deprive them 
of jobs. This, of course, was the origin of the word “sabotage.” 

And in France a so-called economist with a rather warped outlook 
introduced into the Chamber of Deputies a bill that would make it 
illegal to sharpen an ax. Dull axes would obviously make cutting 
down a tree more difficult, would require that much more labor, ana 
thus provide more jobs. 

Getting back to our own company, Stromberg-Carlson’s biggest 
business—not generally understood by the public—is the telephone 
business, not radios and TV. The telephone business is by far our 
biggest business. We make complete dial systems, exchanges, instru¬ 
ments, and so forth, for the independent telephone indw&ry, which 
comprises some 5,000 companies, giving service to almost two-thirds of 
the geographical area of our country. That again is something not 
generally understood by the public. The introduction of the dial tele¬ 
phone displaced large numbers of telephone operators who, yop will 
recall, used to answer your phone, and maybe still do in your small 
towns, if any of you are from the small towns or the sticks some¬ 
where—used to answer your phone with a pleasant “Number, please?” 
They are practically gone now. Yet, despite the terrific pace with 
which the telephone companies have been modernizing their plants 
and installing dial phones and automatic equipment, including now 
completely automatic and unattended toll-ticketing systems, there are 
more people—by far more people—employed by the telephone com¬ 
panies today than ever before. 

Actually, I know of no specific case in which even these “Number, 
please?” girls, the ordinary switchboard girls, were displaced, even 
m a single company. They took them right into other jobs because 
the companies, as they mechanized, have grown so fast. True, there 
are fewer people per telephone, but there are millions more telephones, 
and there will be millions more than now. This is a typical American 
production story. 

j 45006 0—59 - 14 


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The introduction of new machinery and new instrumentation has 
never failed to increase the overall opportunity for more and better 
jobs. It is a simple mathematical process. Technology multiplies 
the amount of the goods per worker. The more goods the more 
cheaply they can be sold. The more cheaply they can be sold, the 
bigger the market they can find. The bigger the market, the more 
people that must be employed to fill the demand. (That I put in there 
parenthetically. It wasn’t in the script.) It is a truism, 1 think, that 
is characteristic of our entire industrialization of this country and is 
going to continue to be in my judgment. Thus I think it is sound to 
predict that the impact of automation on our economy will be gradual 
and evolutionary rather than sudden and evolutionary. I repeat that 
we desperately need automation to maintain our standard of living 
with the onrush of our population, and in passing I would like to ex¬ 
press the thought that we need be more concerned about the avail¬ 
ability of human engineering talent than we need be about the impact 
of automation. We are really getting into a serious situation in this 
respect, for we are graduating far fewer engineers than our industry 
needs now, let alone the future. 

Anything you gentlemen can do to stimulate our talented youth to 
go into engineering would be of great benefit to our country. Even 
if we persuaded twice as many qualified students to take up engineer¬ 
ing in the future as are now entering these fields, it would take years 
before we could catch up with the shortage. 

As is frequently the case with such complicated problems, I heard 
one man expound a very simple proposition the other day, that he feels 
contributes greatly to our engineering shortage. In these days of high 
educational costs, where thousands of students are trying to get the 
assistance of scholarships in one form or another, this man claims that 
the vast majority of them shy away from the exact sciences like math, 
physics, ana chemistry because in these sciences you either know the 
answer or you don’t; you are either right or wrong, and the teacher 
has no problem in determining which. 

In the humanities, where a student can call on his imagination and 
at least make a bluff if he is not sure of the answer, he frequently 
gets by because it is much more difficult for the teacher to evaluate an 
imaginative answer. Then when such a student does get into college, 
if he has had no background in the sciences, it is too late to catch up. 

This man claims we are losing thousands of engineers, potentially 

f ood engineers, simply because of this one simple little principle, ana 
am inclined to think he is right. I would like to see tnat corrected. 
Sorry to digress here, sir, but! wanted to mention this subject that I 
feel is of greater importance to the future of our country than concern 
about the impact of automation. 

An excellent closing statement to my remarks would be Philip 
Murray’s well-known statement on the effect of technology on unem¬ 
ployment in the United States, made several years ago wnen he was 
president of CIO. I am sure it will come up several times during 
these hearings, but I am advised it has not yet, and if so it bears 
repeating. Quoting Philip Murray some years back when he was 
president of CIO, he said: 

I do not know of a single solitary instance where a great technological gain 
has taken place in the United States of America that has actually thrown people 
out of work. I do not know of it, I am not aware of it, because the Industrial 


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revolution that has taken place in the United States in the past 25 years has 
brought into the employment field an additional 20 million people. 

The Chairman. That is a very interesting quotation. 

On page 10 you mentioned about the shortage of engineers. I was 
told down at Austin, Tex., the other day, that every graduate of the 
A. & M. College of Texas this year was offered an average of seven 
jobs. They think the shortage will continue, as you suggest here, for 
a long period of time. 

Mr. Tait. I think it is accelerating at a very rapid pace because the 
need for engineering talent is increasing, and 1 think will increase in 
multiples as we go forward. 

Incidentally, across the water, the bear of which we are so fright¬ 
ened, is turning out more engineers now than we are. 

I think it is a very serious problem. I think this fellow’s little idea 
about scholarships and the exact sciences has something to it. A pre¬ 
mium might be given. 

The Chairman. It works the same way. 

Mr. Tait. A premium might be given for boys that, properly 
screened, show talent for sciences that would get us back on the track, 
because we are going to need them. On the very subject of automation 
that we are discussing, we will require a higher degree of skills than 
in the past, and many more engineers, but I think we will also require 
more people than ever before. 

The Chairman. Have you given consideration to selecting students, 
say, in high school, who demonstrate that they are intelligent and 
sincere and would like to do something in life, although they do not 
have the finances to go through college, to subsidize them in some way ? 

Mr. Tait. Yes, sir, we are doing that, and most companies that need 
’engineers are doing it. Itis about the only thing we can do. We are 
also donating, contributing to higher education as much as we can 
possibly afford. It constitutes the biggest item in our contributions, 
outside of the community chest, it is tne next biggest, and it is rapidly 
becoming an almost equal amount for educational institutions. We 
attempt to get lads in from high school who become interested in 
electronics or communication, ana if they become interested in us, try 
to steer them into scholarships that we have already set up. 

The university must retain control of these scholarships, but if 
the lad can qualify, he will generally come back. That is no as¬ 
surance that we can keep him, but all industry, other companies, feel 
the same as we, that it is for the good of the whole even if we 
can’t keep them later. 

Some of the big ones, GE, and General Motors, and others, go to 
some colleges and say, “We will take your entire graduating class, no 
screening or anything. We will take every graduate.” That makes 
it a little hard for some of us smaller companies. 

The Chairman. How low on the school level do they go? 

Mr. Tait. Those are college graduates. We will take—and other 
people do it—we will take summer students, the ones under 18 that 
get parental consent for a little work in the summer. Generally 
they are 18 years old who have the right to work. If they like that 
type of work, we may be able to persuade them to go to engineering. 


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The Chairman. Under our system, which of course is the right 
system, there is no way of committing them to stay with you, just 
like the DP’s that come over here. 

Mr. Tait. There shouldn’t be. 

The C hairma n. No. I say that we all agree that it is the right 
system. Even the displaced persons that come over here, sometimes 
they kind of just hop, skip, and jump and don’t stay very long where 
they are supposed to stay. There is nothing we can do about it, and 
we are not complaining about it, and for the same reason there is no 
way of committing these students. We don’t believe in human slav¬ 
ery. We don’t believe in tying human beings down. We expect 
them to take advantage of opportunities as they are presented. 

Mr. Tait. If I may comment, I think our system, which is right, 
will ultimately correct this, but it can be corrected much more rapidly 
with some outside help. The way our system I think would correct 
it—and it is taking place now—is that the engineering shortage will 
put such a premium on themselves that they will get paid more than 
other people:, and as their pay gets above other people, more lads 
taking a look at what is coming will go into engineering. 

The Chairman. That is true in your industry Decause they are 
trained. 

Mr. Tait. That is a long-time cycle. 

Mr. Moore, would you like to ask any questions? 

Mr. Moore. Mr. Tait, am I correct in my understanding that you 
are not an engineer yourself ? 

Mr. Tait. That is correct. I probably ought to be in this business. 

Mr. Moore. But your case demonstrates that, happily, there are op¬ 
portunities for other than engineers in this automation world. 

Mr. Tait. Oh, yes. I didn’t mean to gainsay that. 

Mr. Moore. In speaking of numerical control would you comment 
on how big a run of a model or a gadget is necessary to be economical 
or justify turning to an expensive, special-use machine? 

Mr. Tait. It depends entirely, sir—the answer to that depends en¬ 
tirely on the value of the article and the value of the machine opera¬ 
tion. 

Mr. Moore. Are advanced automated machines or techniques neces¬ 
sarily mass-production instruments? 

Mr. Tait. No. A numerically controlled milling machine could al¬ 
most do job-shop work, if it is the type of work that can be set up, 
and programed, and where it has a reasonable run. You couldn’t do 
5 of these and 2 of these and 1 of these, but you could do a hundred 
of them and another hundred of these, depending again on the rela¬ 
tive value. It could be that you could do 5 of these more economically 
on a numerically controlled machine than 5 manually, if the applica¬ 
tion is complicated and takes so many man-hours of adjustment. It 
depends on the value of the product and operation. 

Our automation section has come up with some very interesting 
charts. I haven’t them here, unfortunately; I didn’t think of them. 
But they are very interesting charts on the length of run of different 
types of operations, where the break-even point would make it worth 
while to have it numerically controlled rather than manually con¬ 
trolled, and the size of run is surprisingly low. 

Mr. Moore. Would a chart like that be intelligible to the layman 
so that you could put it in the record ? 


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. Mr. Tatt. Sure. I will have these sent in for the record. 

(The material referred to appears at the end of Mr. Tait’s testi¬ 
mony.) 

Mr. Moobe. We hear a great deal, or it seems to be implicit in the 
thinking of many people, that automation necessarily means mass, 
continuous production. I gathered that the striking thing about this 
•Convair m ill in g machine was its adaptability to producing prototype. 
But you say that project has now been abandoned as such. 

Mr. Tait. The process Convair was working on was actually very 
similar to what we are doing in our electronic control systems, because 
this big skin mill for airplanes was for big airplanes. Although it 
might not be called mass production—a hundred airplanes is a mass 
production—it runs into millions of dollars, as you well know. The 
new jet bombers, as announced the other day, you read, ran over $5 
million apiece, so a hundred of them is $500 million. A hundred units 
is not wbiat we would conceive in our industry as any kind of produc¬ 
tion, but that is such a big operation, and so valuable, that a skin mill, 
a huge skin mill, for production of airplanes, even though they make 
only 100 or 50 or 25 parts, would save a lot of money. 

Mr. Moobe. 1 have heard it said, and I wondered if you think there 
was any truth in the statement, that as a result of computing machines 
being able to handle the engineering calculations we had the DC-7 
in production a year or two earlier than we might otherwise might 
have had. 

Mr. Tait. I think that is right. I am no more of an expert on that 
than I think you are, but I know it i9 true that in the amazingly com¬ 
plex mathematical calculations required in the design of aircraft com¬ 
puters are an invaluable asset, invaluable. 

Mr. Moobe. In your statement you use the term “to redesign prod¬ 
ucts.” Do you have any examples in mind that you could cite of how 
a product has been redesigned to permit its production by automation? 
I nave heard it said that in many cases we have items which by a 
slight redesign may be made susceptible to automatic machinery, but 
without the redesign they could not be. 

Mr. Tait. That is right. 

Mr. Moobe. Do you have any examples of that? 

Mr. Tait. Yes; this little portable radio I speak of, the first article 
that we designed for automation, conventionally made, took capaci¬ 
tors, resistors, tubes, and connected with a complex system of wiring, 
and they are soldered together underneath a board or plate. To be 
automatic the insertion of these capacitors and resistors in the plate 
should be in certain places for efficiency, not just random around the 
place, and to permit the automatic machine to place them there. 

Furthermore, the circuity should not be a whole mess of wires, but 
should be what we call a printed wiring board. These can be made 
photographically and etched or the circuity stamped out on these 
boards, so that the complete wiring assembly is right there on one 

E iece of formica, or whatever it might be, an insulating material. You 
ave to redesign that little product entirely in order to make it sus¬ 
ceptible for automation. 

Then it goes into a line of these, machines and steps from one to 
another, picking up various components as it goes along. It comes 
out at the end all wired ready for soldering. It is automatically 
dipped and soldered, and all the connections are sealed in. 


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Up to this stage it has been almost entirely automatically assembled. 
The final assembly where they put in tubes and fit them into cases, is 
done by hand. Of course, somebody has to be around to run the ma¬ 
chines, too, and they can turn out rather frightening quantities of 
product. 

The Chairman. Well, Mr. Tait, it has been estimated by a number 
of witnesses that by 1965 we will have about 190 million people in 
this country. Assuming that we have that number, and that the coun¬ 
try expands as it has expanded in the past, and as you anticipate it 
will expand in the future, what do you predict will be the length of 
the workweek by 1965, as compared to our 40 hours a week now 1 

Mr. Tait. I don’t know that I ought to answer that. If I could tag 
that 1965 on it, because I have a bit of a situation—not a labor prob¬ 
lem, thank goodness. We have no labor problem, I am proud to say. 
We have a union, a local, independent union, that we get along with 
beautifully. We have a bonus plan called the Scanlon plan of opera¬ 
tion, that allows them to participate in the earnings derived from in¬ 
creased productivity. However, if I sit here and say publicly that I 
expect the workweek to drop from 40 to 30 or something of that kind 
I might get called up before I get home. 

I don’t think I can really intelligently give an answer. 

The Chairman. I am not urging you to answer something that you 

I don’t think I can really intelligently give an answer. 

Mr. Tait. No; I think it will be a shorter week, though, perhaps 
35—1965; Walter Beuther foresees a 4-day week, doesn’t he? 

The Chairman. Thirty-two-hour week, I believe he said, 4 days of 
8 hours. 

Mr. Tait. I think it will be not more than 35 or 36. 

The Chairman. All right. Now, Do you have much installment 
buying in your business, or are you dependent upon installment buy¬ 
ing to any great extent ? 

Mr. Tait. The answer is “Yes”; in the radio-TV business, install¬ 
ment buying is a very important factor. In the telephone business 
it isn’t called installment buying, but we have a financing subsidiary 
which amounts to the same thing, whereby the telephone company 
really is a long-term installment purchaser, when they buy new dial 
equipment and modernize their plants. They will pay sometimes over 
a 20-year period, and many times they cannot get adequate financing 
for tnat length of time. So we have a financing subsidiary of our 
own. 

The Chairman. But the ordinary consumer durable restrictions and 
limitations don’t apply to that type financing, do they ? 

Mr. Tait. They do not. Actually, the safeguards surrounding such 
financing are stricter than they are on ordinary installment purchas¬ 
ing, because it is so long term. 

The Chairman. Do you see any danger in the present level of in¬ 
stallment buying, and the size of the aggregate installment debt? 

Mr. Tait. No, I don’t think it is any higher in relation to our total 
disposable income. In fact, our disposable income, that is the per¬ 
centage of actual disposable income, is increasing rapidly and I 
think we will continue to increase very rapidly. By that 1 mean a 
narrower term than disposable income, which is really income after 
taxes; I mean discretionary disposable income that is left not only 


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after you pay your taxes but your rent and your actual needs, your 
necessities, food and clothing; the surplus of discretionary spending 
income is increasing very rapidly, fantastically, and predictions in¬ 
dicate that over the next 10 years it will go up like that. In a situa¬ 
tion like that, the gap is widened so that I wouldn’t be concerned about 
the size, although it is huge, the size of the installment purchasing 
in this country. 

The Chairman. Thank you very kindly, Mr. Tait. We appreciate 
your testimony. 

(The information previously referred to follows:) 

Parts Fabrication Conventional or Numerical 1 
By H. S. Gleason, manager, Automation Research Division, Stromberg-Carlson Co. 

Until very recently, there have been two basic conventional processes for fabri¬ 
cating metal and plastic parts. One process involves the use of standard machine 
tools, such as milling machines, lathes, and drill presses that are manually oper¬ 
ated. The other process involves special machinery such as screw machines, 
turret lathes, forging, and diecasting machines. These machines require special 
tooling in the way of cams, templates, molds, and dies, and are often automatical¬ 
ly or semiautomaticaUy controUed. The selection of the most economical proc¬ 
ess for parts fabrication has been established primarily by the quantities involved. 

Today, there is available a third process that is destined to have considerable 
influence on the economy of producing parts. This process involves the use of 
numerically controUed machine tools. These machines are directed in their 
activities by input media that directly involve neither manual manipulation nor 
cams, templates, dies, and the like. There is a distinct advantage in using these 
machines for certain types of work, and their development has progressed to the 
point where certain evaluations can be made, and areas for further development 
and standardization can be pointed out. Developments of the Arma Corp., Gen¬ 
eral Electric Co., General Riveters, Inc., Hillyer Instrument Co., Hughes Aircraft 
Co., Lewis Flight Propulsion Laboratory, Massachusetts Institute of Technology, 
Stromberg-Carlson Co., and many others are quite notable. 

In general automatically controlled machines can be classified either as digital 
(numerical) devices or analog devices. Both types have their merits; There is 
a decided emphasis on the digital types when product versatiUty and extreme 
accuracy is required. Further classification of these machines identifies them 
as either discrete address devices that allow independent displacements along the 
various axes of workpiece or tool motion or those that require coordinated dis¬ 
placements along the axes of motion. Classic examples of the former category 
are automatic drill presses and punch presses. Included in the later category are 
milling machines and lathes. 

The input media for the machine control units take the form of magnetic 
tape, punched paper tape (both standard and nonstandard), punched cards, 
steel strips, photograph film, and the like. The drive systems involve the use 
of hydraulic, pneumatic, and electric prime movers. 

Programing plays a very important part in directing the activities of these 
machines and is often a laborious process. In the digital or numerically con¬ 
trolled devices, programing involves methodizing, computing, coding, and prep¬ 
aration of input media. In analog devices, often only methodizing and prepara¬ 
tion of input media are required. 

Numerically controlled machines will often do certain types of work faster 
and more accurately than those which are manually controlled. However, there 
are certain limitations to these machines that prevent them from being a pan¬ 
acea for all types of production. They are relatively low production machines 
and cannot compete with automatic screw machines or diecasting machines 
when large production quantities are involved. On the other hand, where only 
1 or 2 parts are involved, they are frequently uneconomical. So, in general, 
there is a limited range over which they are now effective. 

Much of the work that can be done to extend the effective range of numerically 
controlled machine tools can be accomplished by reviewing the machines and 
control units themselves. Figure I shows a graphical representation of con- 


1 Adapted with illustrations from Automatic Control magazine. 


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ventional manual fabricating times versus numerical control fabricating times * 
for different quantities of a core model. It can be seen that it would take fewer 
hours to produce one part using conventional techniques than by using numerical 
control. If more than two parts were to be made then it would be economical 
to us numerical control within certain limitations. The break-even point for 
numericarcontrol is approximately 1.3 parts. 

Figures II and III are further examples of conventional manual fabricating 
times versus numerical control fabricating times. The intersection or break¬ 
even point for numerical control occurs after 19.3 and 7.2 parts are needed, 
respectively, if special tooling times is neglected. 

The slopes of the curves are functions of the machining and set-up times, 
and of the dollar value and life of the equipment. 

In the case of numerical control, the intersection of the curve with the ordi¬ 
nate axis is a function of programing time, and the time required to prepare 
holding pigs and fixtures for the workpieces. At present the basic machine tool 
value, the machining, fixture fabricating, and setup times are of almost optimum 
values. This means that the dollar value of the control equipment and the 
programing times are fertile areas for further development. 

Figure IV shows the possible effect of such effort. A fictitious part, a base 
plate, has been assigned dollar values for different methods of manufacturing. 
Numerical control-A has been arbitrarily assigned a slope and ordinate intersect 
that is compatible with the art today. Conventional-C represents the cost of the 
part if no production tooling were used. Conventional-D indicates that consid¬ 
erable production tooling (molds) has been ordered and that perhaps some ad¬ 
ditional machining is necessary. In this particular case, there would be no 
necessity of considering numerical control, as both break-even points occur in 
the region of eight parts. 

If we can decrease the dollar value of the control equipment and at the same 
time decrease the programing time, as compared with curve A, we will establish 
a new curve B. The assignment of values for this curve is again arbitrary, but 
the effect is to allow a certain economy in producing parts by numerical con¬ 
trol. In this particular case, numerical control would be effective for quantities 
of parts from 4 to 18. It can be seen that the reduction of programing time 
will allow smaller quantities of parts to be machined economically. Decreasing 
control equipment cost will extend the production range. 

Several things can be done to decrease the slope and ordinate intersect of the 
hypothetical curve A: 

(1) Making the control equipment at each machine tool less intelligent, less 
complex, and with elements of standardization, will reduce its initial cost and 
hence, influence the slope of A. 

(2) Special purpose machinery will make programing simpler, and can serve 
a multitude of machine tools and their associated controls. 

(3) Methodizing for repetitious parameters can be standardized and filed. 

Not all of the things that can be done to extend the effective range concern 

the design of machine tools or the control units. Starting right from the begin¬ 
ning, the parts should be designed and specified in terms that are commensurate 
with the fabricating or production process. Electronic equipment designers have 
already felt the impact of automatic assembly equipment. This equipment will 
not tolerate design and layouts that have been so common in the past. Tele¬ 
vision and radio sets are now being designed to fit new manufacturing processes 
that not only increase the quality of the merchandise, but also reduce its cost. 

Most of the organizations that are involved in numerically controlled machine 
tools are taking steps to increase their effective range. It should be recognized 
that this field is expanding at a rapid pace. No unnecessary impediments should 
be placed in the way of this progression. It might be well, however, from time 
to time, to take real cognizance of their practical values. Industry is aware of 
the importance of these machines and stands ready to use them. 


8 Adapted from data of MIT Servomechanisms Laboratory, September 1904. 


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Break eren point for alt frame socket fabrication lies between 19 and 20 parts. 


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Comparison of numerical and conventional techniques on a cost basis. See text 

for data. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 213 

The Chairman. Mr. Coughlin. 

As president of the Office Employees International Union, A. F. 
of L., your appearance here ought to remind us of a fact which I 
think is often overlooked. Office work, like factory work, is continu¬ 
ously undergoing technological change. From the day of the quill 
pen, and the ledger clerk on the high stool, to the wide use of calcu¬ 
lating machines and punchcards there has been change until we are 
now witnessing the installation of large-scale computing systems. 
Some of the insurance companies are now handling their premium 
calculations and their reserve accounting on these high-speed, think¬ 
ing machines. The big utility companies, similarly, are mechanizing 
the whole billing process. We are interested in knowing what your 
thinking is about the effect of these new and advanced machines upon 
the position of office workers. 

We are glad to have you, and you may proceed as you desire. 

STATEMENT OF HOWARD COUGHLIN, PRESIDENT, OFFICE 
EMPLOYEES INTERNATIONAL UNION, AFL 

Mr. Coughlin. Thankyou,Mr.Chairman. 

-Automation in the office consists of the development of general 
and special purpose computing machines capable of recording and 
storing information, and of performing both simple and complex 
mathematical operations on such information. It is apparent that 
in the long run, automation will be of benefit to all of us. However, 
through the development of automation, dislocations of personnel will 
occur which will present many problems to be resolved. 

Most experts on automation agree that electronic displacement of 
humans will go farthest and fastest in the office. During World War 
II, a shortage of clerical help was created. It was expected that at 
the end of the war this shortage would be replaced by a huge surplus 
of clerical personnel. The reverse was true. Instead of a surplus, the 
shortage grew more severe. 

During the war, the military and defense agencies acquired the 
bulk of office equipment manufactured. For a few years following 
the end of the war, industry, expecting that the peacetime economy 
would resolve the problems of shortage of clerical help, did little or 
nothing to make the office more efficient. When it became apparent 
that the shortage of good clerical workers was creating serious prob¬ 
lems, industry began to think about it in earnest. Postwar models 
of office machinery were snapped up. Work simplification programs 
were initiated. Work measurement techniques were borrowed from 
the factory. Inservice training efforts were intensified. Still, the 
shortage persisted. In effect, therefore, businessmen found them¬ 
selves running faster and faster merely to stay in the same place. The 
postwar boom in consumers’ spending, the foreign aid programs, and 
our defense spending continued to tax the abilities of business to de¬ 
liver products and services. 

The inevitable increase in office work that accompanied the boom 
made the shortage even worse. Looking at the overall picture today 
we find that there is still a scarcity of competent clerical help. The 
future, however, would appear to be different. 


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In an article recently published in Collier’s magazine, it was stated: 

The office of the future will be a relatively quiet place, but will also be terribly 
efficient * * * Machines do not need a coffee break * * * The nerve center of 
tomorrow’s office will probably contain a fleet of machines tended by 3 or 4 people, 
with the machines doing all the paperwork. Stenographers, typists, stock clerks, 
filing clerks, and bookkeepers will have disappeared. Boutine jobs will be com* 
paratively scarce. If the prospect of such an office makes you feel uneasy, you 
will be sharing an almost universal feeling * * * Office employees are afraid 
of new machines because they may take their jobs away. 

Actually, however, this has not happened to a large degree, as yet, 
but the future seems to hold a real fear of a large number of disloca¬ 
tions because of the installation of machines. It has been freely pre¬ 
dicted that new sales records in business machines will be set and much 
of that gain will reflect the increased interest in automation of the 
office ana the use of electronic data-processing machines. 

These machines involve the use of paper tapes. These tapes make 
possible a great deal of automatic type of repetitive data as, for ex¬ 
ample, names, addresses, and discount rates on bills. They can be 
used within one office or can operate machines at distant points over 
teletypewriters or telegraph circuits. Paper tapes are produced as 
byproducts of various devices such as punched cards, typewriters, 
bookkeeping machines, etc. In addition to operating machines di¬ 
rectly, they can be converted into punched cards. 

We in the Office Employees International Union of the A. F. of L., 
are not afraid of the long-range effects of automation, but we are 
concerned with its immediate effects. It can be that automation over 
the years will eventually bring about the shorter workweek. As one 
writer puts it, it may eventually establish the 7-day weekend. How¬ 
ever, we call your attention to the problems we can expect immediately 
as a result of the installation of automative equipment. 

On Thursday, September 22, 1955, the New York Times published 
a picture of a 25-ton bank clerk named Erma. Erma is a brain and 
nerve system made up of the equivalent of 17,000 radio tubes and a 
million feet of electric wire. It is housed in a strategic spot to the 
paperwork for a whole group of bank branches in the California 
area. It has been installed by the Bank of America. Erma is capable 
of handling the bookkeeping details of 50,000 checking accounts every 
day. While it will handle the work of the bank’s four branches in 
San Jose, it can keep the books of a dozen branches of average size. 
Erma sorts checks by reading magnetized numbers, credits individual 
accounts with deposits, and subtracts withdrawals. It accepts “stop” 
payments and “hold” orders, catches impending overdrawing of ac¬ 
counts, and keeps customers’ balances always available. When a cus¬ 
tomer’s monthly statement is required, the computer will figure the 
service charge and turn out a complete printea record of deposits, 
withdrawals, and balance for the month at the rate of 600 lines a 
minute. This speed will be increased. Nine operators will be re- 

3 uired. Five will sit at a keyboard and feed incoming checks and 
eposit slips into the machine. Others will operate a check sorter 
and supervise details. If a customer writes a check at a store, for 
example, miles away from this particular machine, this check, along 
with hundreds of others, will find its way to Erma. 

The customer’s credit balance is stored in a magnetic drum which 
turns constantly at 33 revolutions a second. The drum will process 


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the check and indicate the new balance or call the operator’s attention 
to the fact that the customer has an overdraft Incidentally, this 
memory drum is capable of storing 300,000 separate numbers. 

The Bank of America has indicated that the machine will increase 
speed and efficiency but will not reduce the number of employees. 
The bank stated, however, that staff members freed by the machine 
will be assigned to other jobs to provide greater service for the bank’s 
customers and the public. At the same time, the bank announced 
that 36 more machines will be built. It is apparent, therefore, that 
all employees displaced will not be reassigned to other work. The 
bank also indicated that Erma would cut by about 80 percent the 
time required to take care of checking accounts. If this time is trans¬ 
lated into numbers of employees and multiplied by 36, the number 
of additional Ermas to be built, it can be easily understood that a 
large number of displacements will occur. 

The bank may put into effect a system of attrition whereby it will 
not replace employees who leave, retire, or are discharged. Thereby, 
they may reduce their staff by a considerable number of employees 
without necessarily involving large-scale layoffs. Whether the num¬ 
ber of employees working for the bank is cut through layoffs or 
through attrition, the cut will take place. 

In a paper presented to the Industrial Relations Research Associa¬ 
tion at Detroit, Mr. Harold F. Craig, of Harvard Business School, 
outlined a case study involving a large unidentified insurance com¬ 
pany. The commercial department of the home office of this company 
was engaged in paper communication by mail, with 7,000 agents 
operating their 200 branch offices in the field organization. The vol¬ 
ume of paper flowing in and out of the department was considerable, 
numbering each workday an average of 36,600 standard forms and 
involving a dollar value of $2,459,000. The unit value of each trans¬ 
action was comparatively small, but the total aggregate value involved 
necessitated a precise system of -accounting control. 

There were 539 people employed in me commercial department 
prior to the installation of automatic processes. Before converting to 
electromechanical methods^ the clerks in one division had to sort and 
record manually 150,000 dividend notices per week. After the con¬ 
version, the detailed repetitive work of this function was done on 
machines, and the job of the clerks was either to control the accuracy 
of the work performed by the machines, or to operate the machines 
themselves. Some of the work in the department was still done 
manually, but most of the volume work, such as the sorting and re¬ 
cording of dividends, was done on the machines. 

. While this company did not introduce any of the better known 
giant equipment such as Erma or Univac, its introduction of auto- 
mative equipment resulted in substantial reduction of personnel. In 
this department a reduction of 133 persons was achieved. Again in 
this instance the employer did not lay off the dislocated personnel. 
Instead, through attrition, the reduction was accomplished. Regard¬ 
less of how it was accomplished, however, this is just another example 
of the fact that substantial reduction in personnel resulted from file 
introduction of automative machinery. 

IBM’s 701, Remington Rand’s Univac, and electronic computers 
will revolutionize office work. It has been stated by an expert tha t 


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computers in an office are going to be like bulldozers in the construc¬ 
tion industry. Electronic computers are sometimes able to do a year’s 
computation in a very few months. These computers can also make 
up the most complex payrolls, perform necessary accounting opera¬ 
tions, and, with their own high-speed printing, run off a pay register 
and make out checks. 

Insurance companies have already installed electronic machinery 
similar to Univac and IBM’s 701. These machines bill customers for 
premiums, calculate agents’ commissions, figure dividends, and work 
out all the necessary actuarial data. Tne Prudential Insurance Co. 
figures that electronic computers will replace 60 to 75 other machines 
along with their operators. They figure to eliminate 200 of their 
personnel in 1 department alone. A utility company in the Midwest 
installed an IBM of the 700 series. The company estimates that 280 
employees will be replaced by the operation of this machine. The 
machine is intended to receive a meter reading on a card fed into the 
machine. It will then calculate the difference from the previous read¬ 
ing, compute it at the present rate, store the present reading, and pre¬ 
pare a completed bill for the customer. 

Both the IBM 701 and Univac can be used in the highly complex 
work of inventory control. Univac has been assigned to this task 
in General Electric’s major appliance division at Louisville, Ky. 
According to an official ox the company, Univac operates in the fol¬ 
lowing way: 

If a decision is made to increase the production of appliances from 1,000 to 
2,000 per day, Univac, within the matter of hours, will be able to show the 
effect on every item of inventory. To do this same job manually, one part of 
total manufacturing planning often requires up to 3 weeks or longer to accomplish. 

Clerical employment in this country has been rising steadily since 
the year 1900. At that time 1 clerical worker was required to handle 
the paperwork of 30 factory workers. By 1940 tins paperwork re- 

3 uired handling by eight clerical employees. This increase took place 
espite the fact that a lot of labor-saving machinery was installed in 
offices, such as typewriters, dictating machines, duplicators, book¬ 
keeping machines, and so forth. All of these devices had one thing 
in common. Their primary purpose was to help business carry on 
certain specific office operations more efficiently. They did not pro¬ 
vide revolutionary new means of getting many different office jobs 
done sim ultaneously. This is the difference between mechanization 
and automation. Automative electronic equipment is designed to cut 
costs in the office. As a result, it will influence the number of em¬ 
ployees retained in clerical employment. These machines are being 
sold on that basis. , 

The New York Times of September 21,1955, quoted Mr. Fred M. 
Farwell, of New York, president of the Underwood Corp., as follows 
in a speech before regional company managers from 16 different cities: 

Meeting after meeting of such groups as the Office Management Association 
and the American Management Association have stressed reduction of office 
costs. They usually arrive at office automation as the answer. 

Mr. Farwell predicted that within a few years companies would 
receive data from branch offices on perforated tape, feed the statistics 
to a machin e, and receive up-to-date computations on which to base 


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decisions. “The company which uses stale figures will be left behind,” 
he said. 

The American Management Association and the Office Management 
Association are stressing reduction of office costs. The makers of 
automative equipment are stressing the savings to be gained through 
the use of such equipment. Therefore, we can safety assume that 
in the future this equipment will cut down considerably the number 
of office and clerical employees working in the offices of our country. 

I do not subscribe to the view that dire things lie ahead. We have 
had automation in our factories for some years without disastrous 
results. I do believe, however, that there will be serious problems 
caused by the introduction of automation in offices. Many indi¬ 
viduals who have spent their lives acquiring certain skills and have 
come to believe implicitly in their own indispensability, are in for a 
rude shock. They will see machines do in seconds work that takes 
them days and weeks to accomplish. They will see machines replace 
the jobs they and their coworkers have come to feel are their perma¬ 
nent niches in the office world. A lot of people will lose their jobs. 
A lot of individuals will be forced to acquire new skills. There will 
be many new responsibilities placed on the employers of our country. 

Our union, as a collective-bargaining policy, is insisting on bump- 
back provisions in layoff clauses. That is, we are demanding that 
employees who have been promoted from one job to another up the 
scale within the company will be given the right to bump back in 
accordance with their seniority and qualifications. Before that oc¬ 
curs, however, we are providing that such individuals, if displaced 
by virtue of the introduction of electronic equipment, be given oppor¬ 
tunity to train for the automative job. 

We are also providing that retraining programs be part and parcel 
of the company’s policy. In the event of permanent termination, we 
are asking for and receiving a liberal severance-pay program. 
Through collective bargaining we can protect our membership who 
are touched by the introduction of electronic equipment. In un¬ 
organized offices there is no such protection. 

We call upon the employers in the United States to conform to the 
practices instituted in our organization for the protection of persons 
displaced from office positions as a result of the introduction of 
automation. We feel that responsible employers should, as a matter 
of policy, insure the transition to automation without hardship to the 
office workers of America. We further urge employers to share with 
labor the gains in pr oductivity resulting from automation. 

The Chairman. We appreciate your good statement, Mr. Coughlin. 

You have heard the estimates that have been made about our popula¬ 
tion 10 years from now, 1965, and about the economy continuing to 
expand. What do you predict will be the workweek at that time? 

Mr. Coughlin. I very definitely agree with Walter Beuther that a 
shorter workweek will be the eventual result, and that we will 
eventually go on a 4-day week. 

Incidentally, I was quite sympathetic to the previous person who 
testified, in his refusal to make such a statement in view of the fact 
that he had a union to deal with. 

The Chairman. What are the principal industries that your work¬ 
ers axe engaged in? 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


Mr. Coughlin. We are engaged in practically all types of manu¬ 
facturing. We also are engaged in many of the service industries. 
We are not highly successful in insurance or the banking field. Up to 
the present date, the extent of unionization in the offices of our coun¬ 
try have been mostly along the Hens of following the success of other 
organizations, such as the large manufacturing-type unions. 

The Chairman. And automotive and different types like that? 

Mr. Coughlin. Thatisright. 

The Chairman. Thank you very much. We appreciate your testi¬ 
mony. It will be helpful to us, I know. 

The committee will stand in recess until next Monday at 10 a. m. 
in this room. 

(Whereupon, at 3:20 p. m., the committee recessed until 10 a. m., 
Monday, October24,1955.) 


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MONDAY, OCTOBER 24, 1955 

Congress of the United States, 

Subcommittee on Economic Stabilization of the 

Joint Committee on the Economic Report, 

Washington, D. G. 

The subcommittee met at 10 a. m., Hon. Wright Patman, chairman, 
presiding. 

Present: Representative Wright Patman, chairman of the subcom¬ 
mittee, Senator Ralph E. Flanders. 

Also present: Staff Economist William H. Moore; Staff Director 
Grover W. Ensley. 

The Chairman. The subcommittee will please come to order. 

Mr. James B. Carey is our witness at this time. 

The industry with which your union, Mr. Carey, is associated, that 
is, the electrical industry, is in rather a unique place in this field of 
automation, as I see it. In the first place, much of the automation 
equipment, or at least important parts of it, used in other plants such 
as auto, chemical, and office work, is built by your industry. At the 
same time, since yours is a big industry with Dig-industry, mass pro¬ 
ductions volume, you are also feeling the impact of new automatic 
equipment being put in to help build this automatic equipment You 
are to an increasing extent producing automation equipment; are you 
not? 

Mr. Caret. Yes, sir. 

The Chairman. Mr. Carey, we are looking forward to hearing you. 
You may proceed in your own way. 

STATEMENT OF JAMES B. CABEY, SECRETARY-TREASURER, CIO, 

AND PRESIDENT, INTERNATIONAL UNION OF ELECTRICAL 

WORKERS, ACCOMPANIED BY NAT GOLDFINGER, ASSOCIATE 

DIRECTOR OF RESEARCH, CIO 

Mr. Caret. Chairman Patman and members of the subcommittee, 
I am accompanied by Nat Goldfinger who will assist me in explaining 
the charts that I have. 

I am James B. Carey, secretary-treasurer of the Congress of In¬ 
dustrial Organizations, and president of the International Union of 
Electrical Workers, CIO. 

I appreciate this opportunity to appear before you today, and I 
should like to congratulate the joint committee for holding these hear¬ 
ings on the social and economic implications of automation. 

219 

45006 a— t59-15 


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First, I think that we should define our terms. There has already 
been too much nonsense expressed on this subject at these hearings, 
and elsewhere—about automation being nothing new, that it is merely 
continued mechanization, and that it will have no disrupting effect 
upon our society. . 

When I speak of automation, I am referring to the use of mechanical 
and electronic devices, rather than human workers, to regulate and 
control the operation of machines. In that sense, automation repre¬ 
sents something radically different from the mere extension of mech¬ 
anization. Of course, it is not a sudden, full-blown appearance. It 
rests upon previous developments, especially upon Government- 
sponsored research and development in electronics and radar. But it 
is a new departure from the older methods of machine production by 
machine operators, since it represents the automatic operation of 
machines and of entire industrial and clerical processes. 

The first industrial revolution, usually identified with Watt’s steam 
engine, replaced animal and human muscle power with steam power 
and electric power; it replaced the handicraft worker with the ma¬ 
chine tender or machine operator. Automation uses control devices 
that result in the automatic production and processing of goods and 
data; it tends to replace the human regulation and control of machines 
and thereby changes the machine operator into a supervisor of an 
automatically controlled operating system. 

Automation is a new technology, arising from electronics and elec¬ 
trical engineering. It is not a new machine, or even a new industry. It 
is rather, a new and revolutionary technology that is applicable to 
almost all, if not all, types of industrial and clerical operations. It 
makes possible the automatic office, as well, as the automatic factory. 
There is a likelihood that entire departments, offices, and plants, in 
the major parts of the economy will be using automation equipment 
within the coming 10 years. 

I am the president of the union whose members are at the center of 
this second industrial revolution. The members of the International 
Union of Electrical Workers produce the electronic equipment, the 
electrical machinery, and electronic computers that make automation 
possible. Furthermore, the members of lUE-CIO work in an indus¬ 
try in which automation has already been introduced, an industry 
that is being rapidly automated. 

The problem before us is not whether we are for or against auto¬ 
mation. This new technology is already here and is growing by leaps 
and bounds. The problem is whether or not the American people 
and our free society will be subjected to vast dislocations during the 
coming 10 to 20 years, when the automatic operation of many indus¬ 
trial and clerical processes will be introduced. 

The CIO welcomes technological change since it makes possible im¬ 
provements in living conditions and increases in leisure. For that 
reason we have welcomed the development of automation. But we 
know that improvements in living conditions, a shorter workweek, 
longer vacations, earlier retirement, and all the great promises of auto¬ 
mation will not come automatically. Industry, labor, and Govern¬ 
ment will have to plan for these achievements and will have to work 
for them. 


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Technological change always has some degree of social and eco¬ 
nomic impact. Eapid technological changes in the past brought vast 
social ana economic dislocations, witness the social dislocations and 
the ruthless exploitation and grinding poverty of millions of men. 
women, and children in Great Britain during the introduction of 
powered machinery and factory production. Or witness the near¬ 
catastrophe that befell us in our own country in the 1930’s because 
we failed to adjust our economy and society to the introduction of 
mass production techniques in the 1920’s. 

Technological change almost always means labor displacement. 
It almost always means greater output at reduced costs of production. 
That is a major reason why companies engage in technological re¬ 
search and invest in new machines and in new production techniques. 
The new machines and new techniques of automation, now being intro¬ 
duced, are labor-saving and probably capital-saving, as well; greater 
output per man-hour of work and greater output per unit of capital 
investment. 

Automation is being introduced in industry and commerce at the 
same time that great advances are being made in more conventional, 
routine machine operations. In combination, automation and routine 
improvements in mechanization are already speeding up man-hour 
output and reducing unit production costs to an extent that would 
have been undreamed of only 15 years ago. 

With the widespread introduction of automation in the coming 
decade, and the continuation of routine improvements in mechaniza¬ 
tion, the rate of productivity increases will accelerate. And in the 
offing are further revolutionary changes in technology—the use of 
nuclear power and possibly of solar energy for industrial and com¬ 
mercial purposes. 

Rapid technological change and the resulting sharp increases in 
man-hour output must be accompanied by rapid increases in consumer 
purchasing power. Only if consumers have the buying power to pur¬ 
chase the rising output of goods and services made available by the 
new technology will we be able to maintain high levels of employ¬ 
ment nationally. The alternative is mounting unemployment, since 
an expanding volume of production, without rapidly growing mar¬ 
kets, means inevitable depression. 

But there is no assurance whatsoever that mass consumer markets 


will grow fast enough to absorb rapidly rising output. What is re¬ 
quired is that organized labor be strong and effective, that industry 
accept collective bargaining in good faith, that business share the 
benefits of rising productivity with consumers through reduced prices, 
that Government tax and general economic policies be aimed at main¬ 
taining growing consumer markets and high levels of employment. 

It is essential that we maintain high national levels of employment 
to minimize and localize the social and economic dislocations of the 


introduction of automation. But high national levels of employment 
will not altogether eliminate the problems. The introduction of the 
new technology will mean countless problems for individual workers 
whose skills are outdated, for older workers who are displaced and 
cannot find new jobs, for entire communities whose plants move to new 
areas, for small business concerns that cannot compete against auto¬ 
mated giants. 



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AUTOMATION AND TECHNOLOGICAL CHANGE 


It is morally and economically wrong to expect the working people 
of America to bear the entire burden of the social costs of introducing 
automation. 

If business is going to benefit from the introduction of automation, 
then business should assume some share of the social costs—in retrain¬ 
ing workers, for example, or in assisting families to move to new areas 
from communities in which plants have been shut down. 

If society is going to benefit from the introduction of automation- 
then society, through the Government, should assume some share of 
the responsibility, by such measures as a vast improvement of educa¬ 
tional and vocational training facilities, the opportunity of early re¬ 
tirement under the Social Security Act, and assistance to distressed 
communities. 

I can assure you that organized labor will do all in its power to see 
to it that working people are not compelled to bear the entire burden 
of such social dislocations, that both industry and Government assume 
some degree of responsibility for minimizing the disruptions con¬ 
nected with the introduction of automation and for assisting those 
who may be left stranded during the transition to the new technology. 


EMPLOYMENT IN THE ELECTRICAL MANUFACTURING INDUSTRY 


You have already heard much about the electrical manufacturing 
industry, in which automation equipment is produced. You have been 
told that this industry has doubled in size in the recent past and will 
double in size again in the next few years. You have been told, too, 
that the electrical manufacturing industry will expand so rapidly as 
to absorb workers who are displaced from their jobs in other in¬ 
dustries. I am sorry to say that these statements are a combination of 
partial truths and nonsense. 

The electrical manufacturing industry has been expanding, true 
enough. Within a short period of time its production and sales have 
doubled. Its profits and dividends make it most attractive for wealthy 
investors. But employment has crawled ahead merely at a snails 


P You have heard a number of Polly anna optimists here, who have 
talked about the great expansion of this industry, but without refer¬ 
ence to employment. They have preferred to hide behind generalities 
and sales promotion cliches. Let s look at the facts. , , 

From 1947 through the first half of 1955, the output of goods m the 
electrical manufacturing industry, as a whole, soared 87 percent. But 
the total number of wage and salary employees in this industry rose 
only 20 percent in that period. In other words, production rose more 

than four times faster than total employment. . _ . 

How was this astonishing feat accomplished ?—through rapid im¬ 
provements in routine mechanization and the early introduction of 

automation within the industry. ... ,, 

During this period of time, 1947 through the first half of 1955, the 
number of production workers alone in the electrical manufacturing 
industry increased only 14 percent, while production rose 87 percent. 
Output soared almost six times faster than the number of production 

^Employment of nonproduction workers, however, increased 40 per¬ 
cent, indicating, in part, the rising importance of professional engi- 


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neering employees and the growing number of clerical employees. 
But automation, as will be shown later, will cut clerical employment 
drastically in the years ahead. 


Electrical machinery production and workers in the industry, comparison 

1941-55 



Electrical 
machinery 
production 
index 1 

All wage and 
salary em¬ 
ployees in 
the industry 

Production 
workers 
in the 
industry 

Nonproduo- 
tion employ¬ 
ees in the 
industry 

1st half 1965_ 

189 

1,102,600 
918,000 
20 

805,600 

706,000 

14 

297,000 

212,000 

40 

1947_ 

101 

Percent increase.... 

87 



< 1947-49—100. 


Source: Federal Reserve Board and Bureau of Labor Statistics. 


Mr. Goldfinger. This table indicates that the industrial production 
index of the Federal Beserve Board, as applied to the electrical manu¬ 
facturing industry, increased 87 percent from 1947, through the first 
6 months of 1955. In that same period, the total number of wage and 
salary employees in that industry increased 20 percent. The total 
number of production workers alone increased 14 percent, while the 
number of nonproduction workers in the industry increased 40 percent. 

Mr. Caret. The record, therefore, is truly one of spectacular growth 
of production for the electrical manufacturing industry. But em¬ 
ployment merely inched forward. 

How do these figures for the industry, as a whole, check with de¬ 
velopments in its fast-growing electronics division, that produces 
radios, television, and electronic equipment? Here is what a Depart¬ 
ment of Labor study on the electronics industry reports: 


Electronics output In 1952 was 275 percent higher than in 1947 but was pro¬ 
duced by only 40 percent more workers * * *. 

Output per man-hour (in the electronics Industry) may rise even faster during 
the next few years as a result of improvements in manufacturing techniques. 
* * * These trends toward automation may result in the greatest reduction in 
unit man-hours in the industry’s history during the next few years. 

If we take one of the industry’s major corporations, as an example, 
we find the same pattern of development—soaring levels of production, 
sales, and profits. On that basis, the Westinghouse Corp. could appear 
here and tell us that it had grown 73 to 99 percent in 7 yearc, between 
1947 and 1954, and that would be the truth for sales ana profits. But 
its total number of employees, nonproduction as well as production 
workers, increased only 15 percent in those 7 years. 


Westinffhouse Electric Corp. 



Products and 
services sold 

Net profits 
after taxes 

All em¬ 
ployees 

1054_ 



117,143 

102,065 

15 

1047 _ 

Percent incrwwA. _ _ _ _ _ 



Source: Standard <fc Poor’s. 


Mr. Goldfinger. Standard & Poor’s record for the Westinghouse 
Corp. for 1947 to 1954 shows a 99-percent increase in the dollar value 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


of products and services sold, a 73-percent increase in net profits after 
taxes, but only a 15-percent increase in total employment of produc¬ 
tion, as well as nonproduction workers. 

Mr. Caret. The phenomenal growth of Westinghouse, and of the 
electrical manufacturing industry generally, has meant spectacular 
increases in production, sales, ana profits. It should be underscored 
here that the Government has subsidized a good part of this growth— 
through accelerated depreciation of much of its new facilities, the pur¬ 
chase of a large percentage of its output, the cost of much of the basic 
research, and the training of many of its key scientific personnel. But 
the remarkable progress of this partially Government-subsidized in¬ 
dustry has not been accompanied oy anything like an equally spectac¬ 
ular growth of employment. The sharp expansion of this industry’s 
output, in the past decade of increasing mechanization and the begin¬ 
nings of automation, has meant merely a slow rise in total employ¬ 
ment and an even slower increase of production-worker employment. 

THE IMPACT OF THE BEGINNINGS OF AUTOMATION, 1953-55 

The considerable lag of employment, in the past 8 years, behind 
soaring output in the electrical manufacturing industry, and in its 
rapidly growing electronics division as well, is a broad indication of 
the impact of improving mechanization and the early beginnings of 
automation. But it has been only in the past 2 or 3 years that auto¬ 
mated equipment has taken root in parts of the industry. 

A more direct indication of the impact of the beginnings of automo¬ 
tion—and of continued improvements in mechanization—can be seen 
from an examination of employment in the past 2 years. Let us look 
at employment trends from 1953 through the first half of 1955, with 
production at high levels in both periods. 

In the electrical manufacturing industry as a whole, the total num¬ 
ber of wage and salary employees declined 9 percent between 1953 
and the first half of 1955. Even more significant is the 13 percent 
decline in production-worker employment, in that period, while fhe 
number of nonproduction employees increased only 1 percent. 

The beginnings of automation in the electrical manufacturing in¬ 
dustry have helped to cut the employment of production workers, 
while the employment of professional and clerical employees has 
moved up slightly. But the spread of automation in the offices will 
cut the manpower requirements for clerical operations within the next 
few years. 

When we examine employment trends in the electrical manufactur¬ 
ing industry’s major divisions, in the.past 2 years, we find the same 
pattern—a decline of total employment, a sharp cut in the employ¬ 
ment of production workers and relatively stable or slightly increas¬ 
ing employment of nonproduction workers. 

In the division of the industry that produces electrical generators, 
transmitters, distributors, and electrical industrial apparatus, the 
number of production workers declined 11 percent and nonproduction 
workers by 2 percent. 

In the electrical appliance division of the industry, production- 
worker employment fell 13 percent, while nonproduction-worker em¬ 
ployment increased 2 percent. 


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The number of production workers in the electric-lamp division of 
the industry declined 7 percent and the number of nonproduction 
workers remained the same. 

In the industry’s communication equipment division, that produces 
radios, television, and electronic equipment, the number of production 
workers fell 16 percent, while nonproduction employment increased 
3 percent. 

In the production of miscellaneous electrical products, the number 
of production workers declined 12 percent, and the employment of 
nonproduction workers increased 4 percent. 

Mr. Goldbtnger. The table that follows, from the Bureau of Labor 
Statistics employment figures, indicates what has happened to em¬ 
ployment in the industry between 1953 and the first half of 1955. 

In the electrical machinery industry^ which is a broad category of 
electrical manufacturing, and in its major subdivisions, there has been 
a decline of total wage and salary employment, a greater decline in 
production-worker employment, and either a small decline or slight 
increase in employment of nonproduction workers. 


Electrical manufacturing employment declines, despite high level output, 1958-55 



All wage and 
salary em¬ 
ployees 

i 

Production 
workers in 
the industry 

Nonproduo- 
tion workers 
in the in¬ 
dustry 

ELECTRICAL MACHINERY INDUSTRY 

1st half 1955 . .. _ ' 

1,102,600 

1,219,800 

—9 

805,600 

925,100 

-13 

297,000 

294,700 

+1 

1963 . 

P^rr^nt chauge_.. - _ _ 


ELECTRICAL GENERATING, INDUSTRIAL APPARATUS, ETC. 

1st half 1955. 

369,500 

402,800 

-8 

259,800 

290,700 

-11 

109,700 
112,100 
—2 

1963.. 

Percent change..._ 


ELECTRICAL APPLIANCES 

1st half 1955. 

64,500 

70,800 

-9 

51,600 

59,000 

-13 

12,900 

11,800 

+9 

1953. 

Percent change_ 


ELECTRIC LAMPS 

1st half 1955. 

25,700 

27,600 

-7 

22,300 

24,200 

-7 

3,400 

3,400 

0 

1953.-.-. 

Percent change..... 


COMMUNICATION EQUIPMENT 

1st half 1955_ _ 

493,800 

556,000 

-11 

354,000 

419,900 

-16 

139,800 

136,100 

+3 

1953. . 

Ppment change . _ _ _ • _ 


MISCELLANEOUS ELECTRICAL PRODUCTS 

1st half 1955. 

45,400 

49,500 

-8 

33,600 

38,100 

-12 

11,800 

11,400 

+4 

1953. 

Percent change..._...._ 



Source: Bureau of Labor Statistics. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


Mr. Caret. If we examine the record of the Westinghouse Corp., 
for example, we find a similar pattern of employment trends. 

In 1954, Westinghouse sales were $48,998,000 greater than in 1953. 
With the added help of the elimination of the excess profits tax, the 
corporation’s net profits, after taxes, were $10,271,000 greater than in 
the previous year. But the corporation’s total employment declined 
5,586 from 1953 to 1954. 

Mr. Goldfinger. The following table on the Westinghouse Electric 
Corp., from Standard & Poor’s, indicates that the dollar value of 
products and services sold increased almost $49 million from 1953 to 
1954. Net profits after taxes increased over $10 million in that period, 
while total employment in the corporation decreased 5,586. 

Westinghouse Electric Corp. 

Net profits 
after taxes 

$84,594,000 
74,323,000 

+10,271,000 

Source: Standard & Poor's. 

Mr. Caret. The pattern of employment trends in the electrical 
manufacturing industry in the past several years is clear, I think, 
from the record. Manpower requirements per unit of output in this 
industry are being reduced sharply as a result of continued improve¬ 
ments in mechanization and the increasing spread of automation. 
Manpower output is rising at spectacular rates. Total employment, 
under these conditions, can, at best, merely lag far behind rapidly 
rising output. 

During the past 2 years, production levels in the industry and its 
various divisions did not rise enough to prevent a decline in total 
employment throughout the industry. It now takes very sharp in¬ 
creases in production to bring about even a slight increase in employ¬ 
ment. 

Furthermore, increased mechanization and the beginnings of auto¬ 
mation in factory production, in the past 2 years, have meant rapidly 
rising productivity of industrial production and the impact of dis- 
lacement on production workers. Clerical employees in the industry 
ave not yet felt much of the impact of automation. This will occur 
within the next few years. 

The combined effect of improving mechanization and the spread of 
both factory and office automation, in the coming years, will men-Ti 
even sharper increases in the industry’s productivity than at present. 
Total employment of both production and nonproduction workers will 
lag even further behind rising output levels. In the 8 years from 
1947 through the first half of 1955, it took an 87-percent increase in 
output to raise the industry’s employment by 20 percent; in the com¬ 
ing 8 years, it may require a 150-percent increase in output to achieve 
a further 20-percent increase in employment. It will take accelerating 
rates of increases in output to maintain total employment, let alone to 
raise employment in the industry. 

I do not wish to be misinterpreted here. I am not saying that the 
industry’s total employment will not increase in the coming years. Of 


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117,143 

122,729 

-5,586 



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this, we cannot be sure. Some divisions of the industry will probably 
increase employment—those divisions whose output will soar. (But 
soaring output of automation equipment will mean labor displacement 
in other industries.) 

Employment in other branches of the industry may fall—where out- 

E ut declines or fails to rise fast enough. I think we can be certain, 
owever, that employment in the electrical manufacturing industry— 
the industry that is basic to automation—will rise in the next few 
years, only if output soars at an accelerating rate, faster than the 
industry’s sharply rising man-hour output. 

We cannot and must not depend on this industry to supply any large 
share of the needed job opportunities for those who are displaced 
from other industries, as well as for the growing size of the labor 
force. 


THE INCREASING USE OF FACTORY AUTOMATION 

The electrical manufacturing industry is being rapidly automated. 
Look at any industry journal and you will find a succession of reports 
on the use of new automatic machines and new materials in the electri¬ 
cal manufacturing industry. 

In its June 18, 1955 issue, Business Week reported on the develop¬ 
ment of automatic assembly in the electronics industry: 

The newest switch—from hand assembly to machine assembly of components 
onto a television or radio chassis—is having major repercussions in the elec¬ 
tronics industry today. By the end of the year, according to one industry 
authority, assembly machines will be at work in three of the biggest TV-radio 
companies in the United States. By next year, machine assembly will be going 
strong. * * * 

Three years ago, a few companies took the first step when they stopped solder¬ 
ing by hand. A tank of molten solder took over the operation. * * * 

Then,- about 2 years ago, etched wiring came along. Instead of connecting 
the components with many short pieces of wire, all of the wiring was etched— 
or “printed”—onto a board. Each component was fitted into its proper place on 
the board—by hand; then, by dip soldering, all of the components were at¬ 
tached to the etched wiring. 

This development is beginning to show up in sets now, as companies start 
displaying their 1956 models. * * * 

But the really big change—automatic assembly—is not yet far enough along 
to be found in most 1956 models. (Admiral Corp. is one exception. Insofar as 
this change goes. Admiral seems to be a few months ahead of the industry. 
About 75 percent of the circuity in the new models it introduced last week 
was assembled by automatic equipment.) 

The change to automatic assembly will begin to take shape in other plants 
later this year. * * * 

When you couple it with dip soldering and etched wiring, automatic assembly 
brings the industry close to fully automatic production. With a single machine, 
components are fitted into a chassis automatically. One such machine that is 
now in action can produce about 200,000 assemblies a month. In a minute, it 
can produce 20 assemblies; working by hand, a fairly fast assembly line would 
need about 20 minutes to match what this automatic machine can do in 1. 

As a result, the production of automation equipment itself, as well 
as radios, television, and other electronic equipment, can now be pro¬ 
duced automatically by automation. 

General Mills has put on the market a fully automatic machine for 
the production of electronic equipment. Called Autofab, this new 
machine, it is said, will assemble, in a little over a minute, the same 
number of multiple-part electronic units that now takes one worker 
a full day to assemble. It requires only 2 workers and a supervisor, 


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and has a capacity of more than 200,000 assemblies a month, operat¬ 
ing 40 hours a we&. 

An automatic assembly machine, of this type, for assembling mili¬ 
tary radar sets, has been produced by General Mills for International 
Business Machines Corp., according to Business Week. General Mills 
says it has several other such machines under construction. 

Automatic assembly machines have also been developed by Admiral 
and United Shoe Machine Corp. Many other automatic machines 
are in use or in the process of introduction in various parts of the 
electrical manufacturing industry. 

The introduction of the printed circuit at the Philco plant in San¬ 
dusky, Ohio, resulted in the elimination of 25 percent of its em¬ 
ployees on the soldering and wiring assembly line. Almost all com¬ 
panies in the lamp industry, especially Westinghouse and General 
Electric, have developed automatic machinery. 

Motorola, Inc., according to the October 19,1955, issue of the Wall 
Street Journal, has developed a new high-frequency transistor that 
can be made on a mass-production basis. A transistor is a tiny, dur¬ 
able electronic device that performs the same function as a vacuum 
tube, but requires much less power. Its widespread use, in the next 5 
years, will replace the vacuum tube in most, if not all, electronic 
equipment. 

Paul R. Galvin, president of Motorola, predicted that this mass- 
production transistor would “break the roadblock” of transistor use 
in television sets, in expensive home and car radios, and a wide range 
of military applications, including guided missiles, radar, and elec¬ 
tronic plotting instruments. 

Transistors are already used in hearing aids and portable radios. 
A Motorola executive said that within 3 years or so, it would be pos¬ 
sible to start replacing vacuum tubes in standard consumer products 
with semiautomatically mass-produced transistors. 

General Electric already mass produces a new high-frequency line 
of transistors for use in radio circuits. 

In an address before the security analysts of San Francisco, N. R. 
Marines, senior industrial engineer of the Stanford Research Institute, 
said: 

* * * a dramatic testimonial to the value of automatic production (in the 
electronics industry) is indicated by consideration of manpower requirements 
when daily production rates are boosted to high levels. * * * Our study in¬ 
dicated that production of 4,000 assemblies per day would require about 200 
employees if automatic techniques were used as compared with nearly 1,800 if 
conventional techniques were used. It must be recognized that these findings 
were based on consideration of only 1 electronic assembly—a 0-tube high- 
reliability piece of equipment. * * * 

♦ * * The techniques of automation present (electronics industry) manage¬ 
ment with unprecedented opportunities for large-volume production at lower 
costs. * * * It should encourage continuous operation because of the relatively 
low labor cost involved. 

OFFICE AUTOMATION 

Electronic equipment is already in use in various clerical operations. 
Its use is spreading and there are some observers who believe that 
automation’s sharpest impact, in the coming 5 to 10 years, ‘will be on 
office work. 


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Electronic equipment is already used by many firms for the prepa¬ 
ration of entire payrolls, inventory-control, the making of airline or 
railway reservations, and many other clerical operations. 

The best-known example of office automation in the electrical 
manufacturing industry, at present, is the use of Univac by General 
Electric, in its Louisville, Kv., office. Univac prepares the payroll 
for the plant’s work force of about 10,000. Univac will eventually 
be used to perform many other tasks which now employ a large force 
of white-collar employees—to compile sales records, prepare bills, 
make sales analyses, and schedule production. 

The impact of automation on clerical employment can be seen from 
its use by the Census Bureau where 1 electronic computer, according 
to the Government agency, does the work of about 100 conventions 
tabulating machine operators. The Washington Star of October 17, 
1955, reported: 

The world's largest electronic computing system was turned loose this morning 
on the Bureau of the Census’ 1954 census of business. 

For the first time in the Bureau’s history, the tabulations of the results of a 
full-scale national census are being done entirely automatically on the Bureau’s 
two Univac machines which tabulate, check, edit, and correct the statistics. 

The giant machines, which cost well over $1.6 million, have been used before 
for various smaller projects, but never for a full-scale census. 

Officials at the Bureau say the machines have already made possible reductions 
of from 25 to 75 percent in costs of the smaller projects * * *. 

One machine, the Bureau says, does the work of about 100 conventional tabu- 
lating-machine operators * * *. 

The October issue of Fortune contains an article entitled “The 
Coming Victory Over Paper,” which reports on a completely auto¬ 
matic complex bookkeeping machine. Tne article states: 

One of the most portentous experiments in business history was in progress 
last month in San Jose, Calif. For nearly a decade, giant electronic computers 
have been talked of as the answer to the mountainous paperwork of modern 
commerce. But there has been a difficulty: most paperwork is composed, quite 
literally, of printed or written information on paper, and before a computer can 
work with invoices, bills of lading, or paychecks, all paper-borne data must 
be transferred to punchcards, recording tape, or computer keyboard. Last month, 
however, the Bank of America was field testing, through its San Jose branches, 
a revolutionary machine * * * which not only could handle all the records 
for 32,000 checking accounts but could also “read” its information directly off 
ordinary paper checks. 

It is claimed that the entire operation of maintaining the records 
of the bank’s 32,000 checking accounts can be performed by 1 such 
machine, operated by 9 persons—replacing up to 50 bookkeepers. 
Future models of this machine, it is reported, will be able to maintain 
records for 50,000 accounts. 

The spread of automation equipment in office operations revolu¬ 
tionizes clerical processes, just as factory automation revolutionizes 
industrial operations. Office automation will probably become wide¬ 
spread within the next several years. And with its spread through¬ 
out the economy—including the electrical-manufacturing industry 
which produces the equipment—manpower requirements for clerical 
work will be cut sharply. 

To an increasing extent, scores of bookkeepers, accountants, statis¬ 
tical clerks, typists, and other clerical workers will be replaced by 
electronic systems and by a few people who supervise the operations 
of such systems, and by technicians to maintain and repair them, 


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Clerical work forces will be cut drastically and the entire nature of 
jobs and clerical operations will be revolutionized. 

GROWING MASS MARKETS NEEDED FOR HIGH EMPLOYMENT 

With the rapid growth of output resulting from automation and 
increased mechanization, a rapid and continued growth of mass mar¬ 
kets is essential if high national levels of employment are to be main¬ 
tained. That means that consumer purchasing power must increase 
rapidly enough to enable market demands to grow, along with the 
rise in output. 

Organized labor has made a significant contribution to the growth 
of mass markets. The unions will continue to work hard for con¬ 
tinuing increases in wages and improvements in fringe benefits—to 
see to it that wage and salary earners obtain a fair share of the 
benefits of technological progress. 

The union’s tasks, in this endeavor, are not easy. Management 
resistance to effective union organization and to genuine collective 
bargaining is still widespread. Management resistance to justfiable 
wage increases is considerably stronger. 

To take an example from the electrical-manufacturing industry, 
man-hour output in the Westinghouse Corp. plants has risen by some 
50 percent since 1949. But the wages of Westinghouse workers have 
increased only 26 percent in that period, and it is worth much less 
than 26 percent in terms of real wages or its buying power, because 
of price rises since 1949. 

The Government can contribute to a significant improvement—by 
helping to provide an atmosphere and environment that is friendly 
to collective bargaining. Pious speeches by some administration offi¬ 
cials do not provide such an environment, when other administration 
officers and their assistants—such as the top officials of the Department 
of Commerce—are known to be antilabor and engage in antilabor 
activities. Furthermore, generalities do not provide an environment 
for genuine peaceful collective bargaining, when administration rec¬ 
ommendations to top policy posts in Government agencies, like the 
National Labor Relations Board, include people who are known for 
their antilabor sentiments. 

The Government can also provide an environment that makes pos¬ 
sible the peaceful negotiation of wage increases and fringe benefits, 
along with the economy’s rising productivity. I have heard the Secre¬ 
tary of the Treasury say much about the importance of investment; 
I do not remember his emphasis on the need for increasing wages and 
salaries or improving the incomes of farmers to provide rapidly grow¬ 
ing markets. 

If automation requires 1 worker in an operation, instead of 20, that 
worker deserves a substantial wage increase. Changes in job classi¬ 
fications and wage structures, under these conditions, are essential. 
But this worker’s new wage—under an incentive wage plan or on a 
straight-time basis—will not be 20 times his previous wage. Will 
business take the lion’s share of the benefits of technological progress, 
as it did in the 1920’s, or will society receive a share ? 

Wage and salary increases are an important part of the answer. 
But if society, as a whole, is to receive the benefits of sharp increases 


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in man -hour output, industry will have to share the benefits of techno¬ 
logical progress with consumers through reduced prices. 

A congressional study of the price policies of the Nation’s dominant 
business organizations is long overdue. I think that a thorough inves¬ 
tigation ot the wage-price-profit-investment policies of businesses, 
with assets of $100 million and oyer, would be extremely helpful in 
providing business with an incentive to share the fruits of industrial 
progress with both workers and consumers. 

The Government’s tax policy is an essential part of the needed effort 
to provide rapidly growing mass markets. The tax structure must be 
reexamined and the tax burden on low- and middle-income families 
must be reduced. 

Federal and State minimum-wage laws must be likewise improved, 
to increase statutory minimum wages and to extend coverage to work¬ 
ers who are not now protected by such legislation. The unemploy¬ 
ment-compensation system, too, must be improved to improve the 
benefit structure of unemployment compensation throughout the 
Nation. 

A reduced workweek can be an important shock absorber during the 
transition period to the widespread use of automation. Within the 
coming 10 years the length of the workweek must be reduced. Part 
of the benefits of rising man-hour output should be shared by business 
with the American people through an increase in leisure. 

The 30- to 35-hour workweek, the 2 y 2 - to 3-day weekend, the 4-day 
workweek, and extended paid vacations, these should be our goals 
within the next decade. 

The progressive reduction in the length of the workweek can be 
achieved in good part through collective bargaining. But the Fair 
Labor Standards Act and State laws will have to be amended to 
provide for a shorter workweek. 

Trade-union strength and collective bargaining can do part of the 
job of bolstering and strengthening mass markets. Government as¬ 
sistance!, however, is required. Above all, the Government must live 
up to its commitment under the Employment Act of 1946, through its 
policies and actions, to promote maximum employment, production, 
and purchasing power. 

THE IMPACT OP AUTOMATION ON INDIVIDUAL WORKERS MUST BE 

MINIMIZED 

Even if high levels of employment, nationally, are sustained through 
rapidly growing mass markets, the widespread introduction of auto¬ 
mation in the next several years will create serious problems for many 
individual workers and their families. 

The displacement of individual workers from their previous jobs 
will be an inevitable result of the introduction of automation equip¬ 
ment in factories and offices. Shock absorbers are essential to mini¬ 
mize the burden of technological change on such workers. 

If their skills are outmoded by new automatic equipment it is the 
responsibility of the companies to retrain them for jobs in automated 
factories and offices. The cost of retraining such workers, and of main¬ 
taining their incomes while they are being retrained, should be con¬ 
sidered a regular part of the investment cost of changing over to 
automation. 


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If the worker is 60 years of age, or older—or if he is too old to be 
retrained—he should lie granted the opportunity of early retirement, at 
an adequate pension. This requires changes in the Social Security 
Act and in union-negotiated pension plans. 

Although academic students of the social impact of automation 
speak about the raising of required skills in the long run, a major 
problem for the existing labor force is the possibility of attempts to 
dilute skills, downgrade job classifications and cut wages. 

What happens, for example, to the payroll bookkeeper or accountant, 
who is replaced by an electronic computer ? The employer may offer 
him a job as a statistical clerk, to assist in preparing data for the 
computer; the employer may also attempt to cut his salary. 

The union will do all in its power to prevent such downgrading and 
wage cuts. But the employer has the responsibility of offering him 
an opportunity to retrain for a skilled job, and society has the re¬ 
sponsibility to him, and to others in similar positions, to provide 
available educational and vocational facilities for retraining. 

For workers who cannot find new jobs with their employers, sub¬ 
stantial severance-pay provisions must be made by companies. Busi¬ 
ness does not have the moral right to displace workers who have 
invested years of their lives in the firm, without any provision at all 
for their future welfare. 

Guaranteed wage plans are also essential to provide incomes for 
workers who may he unemployed for long periods of time as a result 
of the widespread introduction of automation. 

Labor-management agreements will have to be revised to provide 
for changes in job classifications, job titles, wage structures, and 
seniority. The seniority provisions in contracts will have to be 
broadened, for example, to give displaced workers an opportunity 
to transfer their employment more easily, without loss of seniority 
rights. In multiplant companies, consideration should be given to 
the possibility of transfers from one plant .to another. 

Management, I think, has a duty to consult with the union before 
automatic equipment is installed, to plan for the inevitable changes, 
and to work out arrangements that will make such changes possible 
at a minimum cost to individual workers. 

A great improvement in educational and vocational-training facili¬ 
ties is required. This is a necessity to help in the retraining of workers 
for responsibilities in automated plants and offices. It is essential for 
the education and training of young people in the new technology. 
As automation spreads there will be a need for an increasing number 
of engineers, technicians, and skilled workers. 

With the increase in leisure, additional education and cultural fa¬ 
cilities must also grow. 

Our school system today is in need of vast improvements. Educa¬ 
tional facilities will have to be expanded even further in the years 
ahead. Federal aid to education is essential to enable the States 
and localities to move forward, with speed, to expand our educational 
system. 

The responsibility of providing shock absorbers to minimize the 
disruptive effects of the introduction of automation on individual 
workers belongs partly with industry and partly with Government. 
Industry must be prepared to bargain with organized labor, in good 


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faith, on these matters. Government must be prepared to fulfill its 
responsibilities in the field of human welfare. 

DISTRESSED COMMUNITIES MUST BE ASSISTED 

There are distressed communities in our Nation today. Although 
compaign promises to assist them were made by Republican candi¬ 
dates in 1952, such assistance has not yet been forthcoming. 

In part, this localized distress is the result of declining industries 
or changes in raw materials. But, in part, it is the result of antilabor 
companies that have run away to new communities where wages are 
low and union organization is weak. The pirating of industry is not 
uncommon; some southern communities boast of their low wages and 
absence of union strength, and, furthermore, attempt to entice com¬ 
panies with special local-tax privileges. The Federal Government 
has also contributed to this problem through accelerated depreciation 
allowances for new plant facilities, without much thought to the social 
impact of new plant locations. 

Automation will probably create many additional distressed com¬ 
munities. Companies may decide, and many have already decided, 
to close old plants or reduce their operations, and to build new auto¬ 
matic plants in new localities, leaving stranded large numbers of 
workers, local businesses, and community facilities. N. R. Maines, 
senior industrial engineer of Stanford Research Institute, said on 
August 17,1954: 

The use of highly automatic machinery may permit plant location with 
major emphasis on accessibility to sources of supply and markets, and with 
minor emphasis on labor supply. 

It may also be cheaper, from the business-profit viewpoint, to build 
a completely new automatic plant in a new area than to automate an 
old plant. 

I am not opposed to the movement of industry when the reasons 
for such movement are based on sound economic and social founda¬ 
tions. But even, then, companies do not have the moral right to move 
out of town without any consideration at all for the old community, 
its workers, and local businesses. At a minimum such companies 
should offer workers an opportunity to work in the new plant at the 
same or higher wages, and should assist such workers in moving to the 
new area. 

Government assistance for distressed areas is absolutely essential. 
There should be an attempt to place Government contracts with firms 
in such areas. Government should, likewise, assist the States and 
distressed communities in attracting new industry. Workers should 
receive Government assistance to move to new areas, if they have found 
new jobs in other communities. 

While industry bears a direct responsibility for assistance in these 
cases, I think that the Government’s responsibility must be under¬ 
scored. All too often the Government has subsidized, at least in part, 
such moves to new areas, through accelerated depreciation under the 
tax laws, for example. 

In the electrical manufacturing industry, we are unfortunately fa¬ 
miliar with this problem. And we know that frequently the move¬ 
ment of plants and the selection of new locations are based on antisocial 
reasons. 


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Take the case of Westinghouse Corp. On November 30,1951, Balph 
Stuart, then a vice president of the corporation, wrote a letter to 
Members of Congress in which he attacked the administration of the 
Walsh-Healey Act, and threatened that Westinghouse expansion in 
the Southern States would be curtailed unless the company was per¬ 
mitted to establish a wage structure in its southern plants that was 
considerably lower than the wages paid to its northern workers. 

What Mr. Stuart apparently wanted were starting rates of 60 cents 
an hour, and a progression to the statutory floor of 75 cents an hour, 
at a time when Westinghouse plants in New Jersey were paying newly 
hired, unskilled workers $1.25 and $1.27 an hour. 

Not too long after Mr. Stuart wrote his letter, crippling amendments 
to the Walsh-Healey Act were proposed in the Senate, and one of these 
amendments was adopted. 

There should be an end to the process of Government subsidies and 
assistance for plant movements in an attempt to exploit workers in 
the South and in other less industrialized areas that lack effective 
union strength. 

The Fair Labor Standards Act and the Walsh-Healey Act should 
be strictly enforced throughout the Nation, without special privileges 
for companies that seek to pay low wages in nonunion communities. 
The Federal tax laws should not be used to subsidize any such migra¬ 
tion of plants. And, where communities are left stranded, the Federal 
Government must move in to assist them and their unemployed 
workers. 

Automation holds forth the promise of great advances in living 
conditions and leisure. But in the transition period to the new tech¬ 
nology, during the coming 10 to 20 years, every possible effort must 
be made to minimize the dislocations that the introduction to auto¬ 
mation will create. 

There is no use in trying to avoid the problems that will accompany 
the widespread introduction of automation. And there are no built-in 
electronic devices that will automatically produce economic and social 
adjustments to the new technology. If we are to enjoy the fruits of 
automation in the period ahead we will have to use foresight and 
wisdom in overcoming its social and economic disruption and in mini¬ 
mizing the possible harm it can bring to countless individuals, com¬ 
munities, and small businesses. 

Organized labor can and will play an important role in making 
these adjustments. To do so, however, will require that business 
bargain with unions in good faith. And business, too, will have to 
assume its share of the social costs of changing over to the new tech¬ 
nology. In this effort, Government can provide the policies and many 
of the shock absorbers to help maintain high levels of employment 
and to minimize the possible social dislocations. 

These hearings should be followed by a continuing study of the 
social and economic impact of automation, by the staff of the joint 
committee. 

The effort to overcome the social dislocations that will accompany 
the introduction of automation should rise above partisan politics. 
If all of us, labor, business, and Government, combine to prevent social 
disruptions and human misery arising from the introduction of the 
new technology, we will be able to usher in a new era of abundance, 
improved living conditions, and increased leisure. 


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The Chairman. Thank you very much, Mr. Carey. Your state¬ 
ment has given us some very good information, which we appreciate. 

The committee is honored this morning with the presence of one 
of the oldest members. I do not mean in age, but in length of service 
on the Joint Committee on the Economic Report. He is, of course, 
a very valuable member of that committee. Senator Flanders, ot 
Vermont, in private life was in the machine-tool business himself.. 
He was with the firm of Jones & Lampson Machine Co., of Springfield,. 
Vt. I think he probably knows, more about this particular subject 
than any other single Member of Congress. We are delighted to have 
you this morning, Senator Flanders. Since I have been interrogating 
the witnesses during your absence, I now yield to you to take up the 
entire time of interrogating this witness, if you wish. 

Senator Flanders. Thank you, Mr. Chairman, I may say that while- 
I have had experience with automation, it is not a broad experience. 
My experience deals primarily with machine tools, and to some extent 
with office machinery. However, within the limits of my experience- 
I am glad to ask some questions. 

Mr. Carey and I are old friends. We have discussed things before,, 
both privately and publicly; I am glad of the opportunity to be with; 
him again. 

One question I would like to ask, Mr. Carey, is this: There was one- 
industrial revolution which began about 50 years ago, and that was,, 
so far as its application is concerned, what is commonly known as; 
the introduction and rise of mass production. That is not to my 
mind the proper term for it. The proper term should be “continuous 
production.” That is, to say every machine was (or is) set up for 
one operation alone, and is not regularly changed to some other oper¬ 
ation. In other words, the work stream flows through continuously 
instead of in lots or batches. 

That, of course, found its greatest exemplification in the automotive- 
industry. I suspect we would all have to give Mr. Henry Ford, Sr.,, 
the credit for initiating it on a large scale. 

Now, that was a tremendously important development. I wonder,. 
Mr. Carey, if you would agree as to the importance and significance- 
of that development ? 

Mr. Carey. Tremendously, Senator. I think in fairness to Mr. 
Ford, we also ought to give him proper recognition for the fact that 
he knew or seemed to know that with the improved techniques that 
he termed mass production would have to come a shorter workday and' 
would have to come improved wages. He was considered something 
of a radical in his day when talking about the 8-hour day and talking- 
about the amount of pay that a worker should receive for those 8 
hours. 

Senator Flanders. You are quite right in that, according to my 
recollection. Certainly he started the rest of the manufacturing- 
world with a notion that the worker should get at least $5 a day. 

Mr. Carey. Yes, sir. 

Senator Flanders. That, of course, was 50 years ago. I speak of" 
this because the question arises in my mind as to whether automation 
has any different effects, must we expect more severe problems, as it- 
com.es into common use, than we did from the introduction of mass-, 
or continuous production ? 

45006 0—59-16 


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Mr. Cakey. The impact of automation will be far greater than that 
of the impact of continuous operation. The continuous operation 
arrangement eliminated or displaced some workers temporarily, but 
the automation displaces all workers, or almost all workers, from the 
operation of machines. 

In that respect, it will have a greater impact. As one who left 
school in the year of 1929, right at the time of the depression, I would 
say that we did not take into consideration as a nation, or as a society, 
the impact of the mass production techniques on our society, and we 
felt the brunt of that and as a ressult we faced a serious depression. 

The generation I am attached to didn’t have the opportunities of 
previous generations in terms of getting employment. I cite you one 
example that perhaps we are both familiar with, Senator: We are talk¬ 
ing of the electrical manufacturing industry. The second largest 
corporation in that field is Westinghouse ana, of course, it is much 
larger than the company you are attached to, Jones & Lampson. Its 
major plant is in the East Pittsburgh area. It is almost the only large 
employer for many of those communities in that area. 

During this present period of so-called prosperity and expansion 
in our industry, Westinghouse in East Pittsburgh does not employ 
production workers that nave less than 13 years’ seniority. 

If you have less than 13 years’ seniority in the Westinghouse plant— 
and this has been going on for several years—when the rest of the 
Nation had a larger measure of employment opportunities—you can¬ 
not even be on the waiting-for-hire list unless you have 9 years’ senior¬ 
ity. There are 1,500 people on the waiting list, all of them having 9 
years or more seniority. That situation is kind of a shocking thing. 

Senator Flanders. Tf I read the recent news correctly, you are at 
present having differences of opinion with the Westinghouse Co. 

Mr. Carey. Yes, sir. There is a nationwide strike on. 

Senator Flanders. You will excuse me then if I seem to sidestep 
that situation, and do not enter into it with my points of view that 
relate directly to it. 

Mr. Carey. Let us take a hypothetical case. Take now a case where 
there is an employer who is the only large employer in several com¬ 
munities. This example can be applied to the section of the country 
you are familiar with, Senator, New England. They are unable to 
employ their present manload, or what they have been having, due to 
the introduction of new methods. They can get greater output with 
less people. So they lay these people off. Where they are unionized 
they lay them off according to seniority rules, but the question arises 
in these communities, where will the people coming out of schools get 
employment ? How can people, whether it is in Braddock, Pa., or in 
Springfield, Mass., or in Bridgeport, Conn., how can they get employ¬ 
ment in these new modern industries like the electrical manufacturing 
industry. 

These corporations are laying off people. If they rehire, they will 
have to rehire those who were laid off. 

Senator Flanders.. Excuse me a minute. Are you suggesting that 
these depressed areas in New England, as an example, are depressed 
due to automation ? I had supposed that most of those, at least those 
I know about, were depressed due to the shifting of the textile 
industry. 


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Mr. Cabet. That is due to the increased mechanization. It is also 
due to Government subsidies, and to local tax subsidies. They can 
build more modem plants in remote communities. 

Senator Flanders. That seems a related problem, but not immedi¬ 
ately pertinent to the question of automation. We don’t want to, or 
maybe we do want to, lay all of the fault for the depressed areas on 
automation. I am just trying to find out how serious it is now, how¬ 
ever seriously it may be developing in the immediate future. 

Mr. Caret. I am just simply suggesting that automation will ag¬ 
gravate the existing situation, and the timid steps that are taken to 
deal with the problem as it exists today will not be effective when 
you have added to this present situation a condition where you can 
build automatic plants in other communities cheaper than you can 
automate the plants that now exist in the old communities. 

Senator Flanders. I understand; then you are speaking of a pros¬ 
pective danger from automation? 

Mr. Carey. I am speaking of actual conditions, things that have 
already happened. Work going out of Pittsfield, Mass., down to 
Home, Ga., work going out of New England into other areas, where 
they have more automatic plants, work going out of this East Pitts¬ 
burgh plant of Westinghouse, going into low-wage areas. The Gov¬ 
ernment has been so good to some of these companies that they have 
so many plants and facilities that are Government subsidized that 
they are giving away, as Westinghouse gave one of its new plants to 
the State of Arkansas. That is unfortunate, but it is a condition that 
exists. 

Senator Flanders. It at least is a mixed condition in which auto¬ 
mation plays its part, as you see it? 

Mr. Caret. Yes, sir; the full impact of automation has not yet 
been felt, and when it is felt we are hoping that the Government will 
be ready, that business will be ready, that labor will be ready, and 
these communities. But I don’t think we can ignore the fact that we 
have an obligation, with the experience we have had in our industry, 
to understand that it is a lot of nonsense to say that automation will 
immediately create additional jobs. That, to me, is a deliberate way 
of fooling the public and fooling our country. 

Senator Flanders. Well, I wouldn’t at the moment want to sustain 
as a general proposition the thesis that automation will increase jobs. 
But, I am thinking of the fact that the automotive industry took its 
great growth after continuous production was developed. I am won¬ 
dering whether—and you would know this because you are intimately 
connected with the electrical industry—whether some of the things 
you mention here with relation to automation in, for example, pro¬ 
duction of television sets, and so forth, has not made for lower prices 
and the improvement of the production without raising prices possible 
in such degree that the general level of production ana employment 
of the television industry has been on the whole not too unfavorable ? 
Hasn’t automation in the television industry, at least maintained 
employment rather than reducing it ? 

Mr. Caret. Oh, no, sir; that is the fallacy that this committee has 
heard time and time again—that all that is going to happen now is 
the same thing that happened when mass production techniques took 
over. 


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Senator Flanders. You say “all that is going to happen”— I am 
asking what has happened? 

Mr. Caret. I say all that is happening now, and what is go ing to 
happen is not just a mere repetition of what happened in the auto¬ 
motive industry when the continuous production operations were 
introduced. This is going to be a different situation. The electronics 
industry that produces the automatic equipment is not moving up 
in employment opportunities as the automotive industry did. This 
is not just a displacement of a carriage trade with automobiles and 
trucks. We have some very interesting figures on this question, as it 
relates to this particular industry. 

Senator Flanders. What you are saying then is that automation 
has already injured employment, for example, in the television 
industry ? 

Mr. Caret. Yes, sir; that the production in the television industry 
is soaring, and profits soar, but employment goes down. In the com¬ 
pany where I was employed, just through the operation of 1 device 
in 1 plant, a dip-soldering process, you eliminate 25 percent of the 
workers on the soldering ana wiring assembly line. 

I might say this: They are now producing equipment to assemble 
on the chassis, through the use of printed circuits and other devices,, 
on an automatic basis—2 people with a supervisor, with a man that is= 
now in operation today, can displace 200 people. 

Senator Flanders. What is the decrease in employment as com¬ 
pared with the increase in production in the television industry? 

Mr. Goldfinger. I have that, Senator Flanders. These figures are- 
from the September issue of the Federal Reserve Bulletin. The pro¬ 
duction index for radio and television sets indicates an increase of 
almost 2 percent between 1953 and the first half of 1955. In other 
words, a comparison between production in the year 1953 and in the 
first 6 months of 1955, shows an increase in the volume of production 
of radios and television sets of almost 2 percent. Now, in that very 
same period of time, according to the Bureau of Labor Statistics,, 
there was an 11-percent decrease in total employment, total wage and 
salary employment, in the communications equipment branch of the 
electrical manufacturing industry. 

Senator Flanders. Are those two categories identical ? 

Mr. Goldfinger. They are not strictly identical, Senator. This is 
one of the things that your committee can help us on, to get the identi¬ 
cal figures. The communications equipment branch of the electrical 
manufacturing industry is the branch of the industry which produces 
radios and television sets, but it also produces other electronic 
equipment. 

Let me finish these figures, though: Employment in this branch of 
the industry, which Mr. Carey’s union represents, there was an 11- 
percent reduction in total wage and salary employment, in that period! 
of time, and that breaks down as follows: A 16-percent reduction in the 
number of production workers, and a 3-percent reduction in the num¬ 
ber of nonproduction workers, bringing it to a total of an 11-percent 
reduction in total wage and salary employment in that branch of the 
industry. 

As I said before, that branch of the industry is the one that produces 
radio and television sets. 


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Senator Flanders. That is, in a way, an indication. Still, owing to 
the fact that the two categories are not identical, it is not as clearly 
defined as we would like to have seen it. 

Mr. Goldjtnger. No. That is certainly true. It is not as clearly 
and precisely defined as we would like to see the figures. I believe that 
perhaps your committee could asist all of us in getting more precise 
figures on what has been happening, but I think if you look through 
Mr. Carey’s testimony you would find comparisons between the volume 
■of production and the reduction in employment from 1953 through the 
first half of 1955 for various branches of the industry and for the 
Westinghouse Corp. You would also find comparisons between em¬ 
ployment and the volume of production from 1947 through the first 
half of 1955. 

Senator Flanders. Still speaking of the electrical industry, and 
your reference to the printed circuit—which in my definition of the 
word is not so much automation as a remarkable and ingenuous im¬ 
provement in the design and manufacture of electrical assemblies— 
almost all companies in the lamp industry, especially Westinghouse 
and General Electric, have developed automatic machinery. Now, 
haven’t those developments been going on before we ever heard the 
word “automation” ? 

Mr. Caret. Yes, sir ; those developments have been going on, and 
that results in serious impacts on our whole society—some good, some 
were not good, because we didn’t take into consideration what those 
impacts would be. 

For instance, General Electric had a great part to plav in developing 
the automatic production of a vacuum tube or a lamp but now, think, 
if you will, Senator, what happens when you have a tape that does the 
work of the supervision. It automatically can determine the produc¬ 
tion of this type item, it automatically measures the things, to see if 
they meet the requirements. It will reject them if they are not of the 
proper qualifications, and it will send it back to have it either re¬ 
paired—automatically, without human hands touching it, or without 
the human mind being used in making these decisions. 

This is a thinking machine that we now have, in addition to auto¬ 
matic, or the mechanized production. I think the printed circuit is 
part of the automatic procedure. I might say that I have seen whole 
companies wiped out. Sylvania Corp. has a plant for producing 
vacuum tubes in Puerto Rico; regardless of what excuse they use for 
closing down that plant, it was due to the development of the transistor. 
They trained people in Puerto Rico to do a certain kind of operation. 
Overnight that is wiped out by a new development, the transistor. 

We are not opposed to the new development. We think it should 
be produced. 

Senator Flanders. Just let me suggest that new developments in 

f eneral are welcome and each one of mem, if it is important, causes 
ifficulty, but that has been doing so for a hundred years. The thing 
that interests us here this morning, as I understand it, is the special 
impact of what we have come to call automation. 

By the way, Mr. Chairman, has Vannevar Bush appeared before 
you? 

The Chairman. He will be here Friday, October 28. 


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Senator Flanders. I don’t want to steal his thunder, but I will 
instead give him some thunder. I will say, that to my knowledge, 
the first automation was in the Waltham Watch Co., in Waltham, 
Mass., more than 50 years ago. I am reminded of it by your speaking 
of automatic inspection, rejection, and so forth. One of the items in 
that piece of automation was the introduction of a machine which 
received jewels from a magazine, calipered their diameter, made a 
recess in the end of the jewel screw to exactly fit that diameter, spun 
the edge of the jewel screw over and it passed on. In other words, 
the machine operated on the basis of measurements it had automati¬ 
cally taken on the jewels. 

Mr. Caret. Senator, could I interpose something that I thought 
was rather remarkable? 

Senator Flanders. Yes, sir. 

Mr. Caret. Some of the best minds of our industry got together 
in a meeting in Schenectady, N. Y. I won’t mention the name of the 
firm. They got together and they wanted to discuss the impact of 
automation on their own activity. They contended that they nad not 
scratched the surface yet with regard to improved techniques, other 
than automation. They wanted to get ready. 

One of these men presented a paper, apparently a well thoughtout 
paper, in which he said that if he and some of his associates had been 
there when God made the world, they would have shortened the time 
that he required for that purpose. 

They went on to explain how they could have gotten it down to a 
5-day operation, through the use of their techniques, and then he 
didn’t stop there. He went on to explain how God had made another 
mistake, that he didn’t provide the necessary data, in case we had 
occasion to make another world, and he said if he had been there with 
some of his associates, he would have made sure that we would have 
the data today, in the event wo have the opportunity. 

I think it is interesting. We are asking that those great minds be 
put to use in trying to develop some of the answers to some of these 
social and economic problems, that they helped to create, and I am 
suggesting here and now that we ought to require some solutions of 
American management. 

I am raising questions here about some of the glib statements that 
some of these people make. They talk about the soaring operations— 
production, profits, and sales. I nope, Senator, that you, particularly,, 
will ask some of these members of American industry what is happen¬ 
ing to employment in this electronics industry. 

You may have occasion to ask about what is happening in the lamp 
industry, as to whether or not the people that are making these items— 
now, it is true it is hard to relate. When you make transistors you 
sometimes don’t know whether they are going into hearing devices or 
some other kind of equipment. They don’t separate it out. Some of 
this equipment we make is used in the aircraft industry, it can be 
used in the automotive industry. I don’t know how far we will go in 
this field. I am simply saying, some way, somehow, this Government 
ought to do something about it, as well as the employers and the unions 
in our industry. 

Senator Flanders. Going back to Schenectady just a moment, you 
speak of the great minds. I would say that that man you mention 


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must have one of the greatest minds of all history. I am surprised 
that he concerns himself with a little thing, if he is prepared to shorten 
the making of the world from 6 to 5 days. I am surprised that he 
bothers with a little thing such as automation. 1 hope there is some¬ 
thing practical in what he said, instead of merely trying to be 
spectacular. 

I would like to refer to office automation, because I have had some 
experience with that. I was surprised and disturbed in my own 
experience when office automation provided by a certain firm located 
in a southern tier of counties in New York State, whose name I will 
not mention, was introduced into the plant with wnich I had a connec¬ 
tion before 1 came here. 

I expected and hoped that office automation was going to reduce the 
number of officeworkers. Of course, that was a hardhearted position 
to take, but the business was growing and it wouldn’t have decreased 
employment in any case. Instead of reducing employment, electronic 
equipment was so “slick” that they put on it 40 things they never 
thought of putting on before. There are now three times as many 
people in the office working with office automation than there were 
before we put it in. 

I sav “we” because it is an old habit. My connection with the com¬ 
pany has dissolved but there is one case, at least, where automa¬ 
tion did not result in unemployment. It resulted in fact in swollen 
employment. We came to know a lot more about what was going on 
than we did before, although perhaps we didn’t know any more about 
what to do about it. 

You have a paragraph in the middle of your remarks. What 
happens, for instance, to the payroll bookkeeper who is replaced by an 
electronic computer? I can tell you what happens. In the first 
place, the United States Government in its great wisdom keeps adding 
new deductions that have to be taken out ox the payroll, and that man 
is still busy as ever. There are more people, as I said, in that book¬ 
keeping department in Vermont than there were before the electronic 
computers were introduced. 

That is not true of course in some of the extreme forms. That is 
true of the bookkeeping machinery in the case I mentioned, and with 
which I have a best acquaintance. It is less true, of course, with some 
of the purer electronic-computing apparatus, such, for instance, as is 
going into life-insurance companies. That is going to reduce the total 
number of clerks at work, unless the company is active and progressive 
and greatly increases the number of policies which it issues and sells. 

Those are all the questions I have, Mr. Chairman. I just want to 
make an observation. 

Referring again to this development of continuous production, it 
did result in the long run, thanks to the efficient negotiations of such 
labor unions as you represent, in shorter hours and higher wages. I 
would not be seriously surprised or disturbed if automation—in case 
automation turned out to be as large a factor as you think it will be, 
and of that I am not yet convinced, but willing to be convinced—I 
would not be disturbed if it made its contribution to shorter hours 
and higher wages, the same as continuous production did, 

Mr. Cakey. I join you in that, Senator, and I think it will result 
in some greater opportunities. 


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Senator Flanders. And at least no higher prices, because I am a 
pessimist, so far as prices ever going down. 

Mr. Carey. Prices can and should be much lower. I can cite the 
example of what the mass-production techniques did to the prices of, 
say, automobiles. Now in recent years, however, the prices nave been 
going up when they should have been going down. Of course, you 
get more shiny equipment on a modern automobile than you did 
before, but that doesn’t necessarily mean that we should eliminate 
the area of our market that we are eliminating by pricing the low- 
priced cars, what we normally consider low priced, too high. We 
should be having some low-priced cars as well as all the Cadillacs 
and the Fords and Chevys, that can no longer be put into the model T 
class. 

I am fearful that the impact in the next 10 years on office work, 
clerical, bookkeepers, and others will be even greater than it will be 
in the production field and manufacturing, ana I say that there will 
be less likelihood that the smaller companies that can’t introduce the 
automatic methods in billing and invoicing, and other things, those 
smaller companies will be unable to compete with the larger giants. 

They will he unable to introduce the newer methods as rapidly. In 
fact, they are rapidly becoming just subdivisions of the presently 
large corporations. That impact would be terrific. 

Senator, I do hope some day that at least the staff of this com¬ 
mittee will give some attention to the impact of automation on our 
cultural opportunities in this Nation. Not knowing too much about 
the field, but having worked at it, I could myself put together, with 
the knowledge that I have, the kind of instrument that RCA devel¬ 
oped. It may sound sensational, but it is true that RCA can get an 
old recording of Caruso’s voice and they can have Caruso singing 
bebop today, modern songs, just automatically, and they can repro¬ 
duce any sound that can be reproduced on any instrument. You 
can take a factory noise and use that as the basis for music—singing, 
by human voices. Automation can have a tremendous impact in our 
cultural development in this Nation. 

I do hope, Senator, that we can look perhaps at some of the figures 
that I have given here and some of the tables on the impact it has in 
our own industry, the industry that some people look to as gaining 
great benefits from the production of automatic devices. We can 
produce automatically automatic machinery that eliminates'workers. 

Senator Flanders. Excuse me just a minute. Did you ever read 
that book The Piano Player? 

Mr. Carey. No, sir. 

Senator Flanders. Well, that is a fantastic book which indicates 
the final development of automation,. in which the automation mech¬ 
anisms are automatically produced, in which men are automatically 
calibrated, and automatically assigned to the duties they are to do. 
If you want to go further than our present knowledges goes—and 
you seem to be interested in doing that—I would suggest that you get 
hold of a copy of that book and read it. 

Mr. Carey. I will do that. 

The Chairman. Thank you very much, Mr. Carey. I also want 
to thank you, Senator Flanders. 

We have another witness before noon, and if the staff will forego 
asking questions, I will likewise. 


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Mr. Caret. Mr. Chairman, I will be available in the event that 
at some future time we can be of assistance to the members of the 
committee and the members of the staff. 

The Chairman. Thank you very much, sir. We expect to have a 
continuing study. 

Our next witness is Mr. William W. Barton. 

Mr. Barton, I understand that your firm is one of those engaged in 
designing and building automated production lines. I gather that 
you made this special-purpose machinery partly by putting together 
standard lathes and drills produced by others, and partly by making 
the transfer elements in between, yourselves. 

Your company is also credited with having an important part in 
the development of the widely discussed ordnance plant at Rockford, 
Ill. Later in these hearings we expect to hear from the United 
States Industries, Inc., the present contract operators of this plant. 
Between your knowledge of the construction of the plan and the pres¬ 
ent operator’s knowledge, we should get a pretty good picture of auto¬ 
mation in this well-known example. 

We are, of course, even more interested in your views on the future 
development of automation in the automobile and metal industries. 
Mr. Barton, you may proceed with your statement in your own way. 

STATEMENT OF WILLIAM W. BARTON, PRESIDENT, W. F. & JOHN 
BARNES CO., OF ROCKFORD, ILL. 

Mr. Barton. Mr. Chairman, I appreciate and thank you for the op¬ 
portunity to appear before your committee. 

My name is William W. Barton. I am president of the W. F. & 
John Barton Co., of Rockford, Ill. 

My company’s primary products are special machine tools. Our 
customers are mainly the mass producing manufacturers of the coun¬ 
try. We process, either “for them” or “with them,” their parts. We 
suggest methods of manufacture, quote the cost of constructing the 
machines necessary to accomplish these requirements and estimate the 
rate of production that the machines will produce. Our company 
has been in the machine-tool field since 1872 and in the special ma¬ 
chinery field since 1924. As such, Ishould say that we have always 
been active in promoting and developing automation. 

While our fine of special machine tools covers a range of opera¬ 
tions, technically we confine ourselves to a rather narrow field in the 
industry. 

For illustrations of our products I have included several of our 
brochures which I believe will suffice to indicate the general nature 
of our work. 

With your indulgence, I would like to refer very briefly to the 
exhibits. 

The first exhibit is a reprint from the February 1946 issue of Ma¬ 
chinery, written by Mr. Oberg, covering some of the operations in 
the Rockford ordnance plant, and attached to the end of the brochure 
is a floor plan, together with photographs of the individual special 
machines created for that line. 

The center section shows the floor-plan layout for the production of 
155 millimeter shells, and the photographs have to do with the indi¬ 
cated operations, or some of them, in that line. 


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I will not take the committee’s time to go in detail on the operations. 
It would take a great deal of time. I would like to do it, but I am 
sure that isnt’ what you want. If you wish to study it, it is shown 
there. 

(The material referred to appears at the end of Mr. Barton’s tes¬ 
timony.) 

The second brochure is a recent one put out by our company. It 
shows some of the intermediate operation transfer mechanisms that 
we have built. The first page shows an automatic probing device for 
a cylinder block. The bottom of the page is a carton caser and recaser 
which takes Quaker Oats cans out, puts them into the line to be filled, 
and then automatically repacks them in the case. 

(The material referred to is available in the subcommittee files.) 

Mr. Babton. Following through are various storage conveyors and 
special machines of an assembly nature, and in the middle of the 
brochure we give some indication of the type of thought that must go 
into the automating of a production line. 

At the end of that brochure, or very near the end, is a page showing 
the automatic transfer of crankshafts and assembled engines for 
balancing. The machines fit in the middle of these transfer mechan¬ 
isms. 

On the last page, we have a compound turn mechanism where the 
problem is to take a cylinder block and turn it 180° in one direction 
and 90° in another. 

Following this brochure is a brochure covering an automatic cylinder 
head line. There are four such lines, as shown in the lefthand photo¬ 
graph of the second page of the brochure. These are the automatic 
lines for cylinder head production recently installed in the Plymouth 
Motor Car Co. They consist essentially of four machines, automated 
together. These four lines are operated and controled by operators 
that stand on platforms and watch the operations. The cylinder 
heads are automatically brought into one end of the line, as indicated 
by the arrow. They are automatically transferred from machine to 
machine, and they are put out at the end of the machine, completely 
finished and ready for assembly in an automobile. This, I assume, is 
the type of machine that you are interested in in the automobile in¬ 
dustry. It is a gradual growth of many, many years, and of many 
mistakes and heartaches. 

The next brochure is a brochure covering similar types of automatic 
machines that the industry calls, “progress through,” or “transfer 
type” machines, that we have built for the automobile industry, and 
the tractor industry, for their cylinder blocks. The operations and 
the nature of the machines are indicated in the brochure. 

(The material referred to is available in the subcommittee files.) 

Mr. Barton. Now, as these machines become more complicated you 
run into a little difficulty with maintenance. As one friend of mine 
told me recently, he had a plant employing 500 men, and his produc¬ 
tion was way behind. He could sell all the product he coula get or 

E roduce, if he could only produce it faster and cheaper, he would be 
appy—he dreamed one night he made a plant that instead of employ¬ 
ing 500 people and one maintenance man to run his plant—he put in a 
plant that employed one person, and then he had to hire 500 main¬ 
tenance men. 


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Now, while my example is facetious, it is to a certain degree true, so 
we have been forced to find ways and means of checking our electrical 
-control and their interlocks, and the last two brochures cover an at¬ 
tempt of ours to systematize and automate, if you will, the checking of 
failures within the line, due to electrical misoperation. Similarly ? or 
also in the last brochure, we show a number of other types of electrical 
control panels which we build, and on the bottom page, a rather com¬ 
plicated electronic cobalt teletherapy machine which we developed 
and built for the nuclear studies division of Oak Ridge. 

Without taking further time, sir, to go into the specific explanation 
of all these machines, automation is a new word for a very old process. 
The trend of automation, I suppose, had its origin as far back almost 
as the invention of the wheel. Sometimes I wonder if the Athenian 
legislature may not have inquired into the economic implications of 
the advent of the harnessing of the energy of the wind. Did they in¬ 
quire into the fate of all the galley slaves that the sail put out of 
work ? I doubt if those replaced workers worried about losing their 
jobs as much as we see some of labor worrying today about the loss 
of theirs. 

But, gentlemen, remember that the history of the effort of man is 
to harness and utilize more and more energy, and to replace by me¬ 
chanical technocracy or automation the jobs of the galley slave so as 
to free him and his progeny from manual labor. 

I could spend a week detailing examples of automation in various 
fields, such as the office, the telephone exchange, the kitchen, or others, 
or in exploration in greater detail examples of the machines and in¬ 
stallations of our company. 

All of this would add up to the conclusions that I am sure every 
witness that comes before you during these hearings will support, 
that is, that automation always has been with us and is the backbone 
of our economic progress. This conclusion is based upon the knowl¬ 
edge that, since the greater the total capital investment per worker 
the greater the productivity of any society—and the more a society 
has to divide the higher the standard of living. The degree of this ad¬ 
vance is the measurement of society’s economic progress. 

I, therefore, inquire as to the definition of automation. 

Harder, of Ford, who has been given credit for coining the word 
"automation,” originally gave it a very narrow meaning, defining it 
as “handling of parts between successive production operations.” 

Peter F. Drucker, in his recent articles in Harper’s Magazine which 
attracted so much attention, stated that— 

Economic progress might be defined as the process of continually obtaining 
more productivity for less money. The means to achieve this is innovation— 
the improvement in living standards is the result of innovation. 

Then he goes on to state that innovation may be technological or 
nontechnological, and that the innovations that have had the greatest 
impact on our economy have been the nontechnological, such as our 
changes in distribution, our development of the new concepts of busi¬ 
ness organization, the new basic management tools such as controls of 
budgets, cost accounting, and production scheduling. 

He defined automation as “the use of machines to run machines,” 
and proceeded to explore the philosophical foundations thereof. 


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Norbert Wiener, the MIT mathematician, predicted that automation 
would lead to “the human use of human beings” and declared that 
“the automatic machine was the precise economic equivalent of slave 
labor.” 

Many others have incorrectly defined or spoken of automation as the 
second industrial revolution. 

Carroll W. Boyce, in his article in the September copy of Factory, 
stated that— 

To most people, automation Is just about anything that spells technological 
progress [or] if it means more production with less work, its automation. 

As you all know, the article proceeded to outline what automation 
would mean to our economy. It was followed by comments by a dozen 
or so well-known men among whom was Senator Joseph C. O’Mahoney. 
And I believe Senator Flanders. 

The October 1955 issue of Business Week, in an article on the sub¬ 
ject finding so many divergent definitions, stated that it was “fool¬ 
hardy to try to add still another.” The article then proceeded to 
analyze some of the features and areas of application. 

Personally, I prefer to think of automation in the larger sense—as 
an innovation created by man to increase his production; technocracy,, 
if you will. 

automation’s application 

In a broad sense, it can be stated that any feat that hands and body 
can perform can be duplicated automatically, given enough time and 
money. 

Too often recently those misguided individuals who fear the term 
“automation” and some of those who welcome it have left the im¬ 
pression that the trend is spontaneous and new. 

Analyzing the application of automation under the impetus of the 
ever-faster pace to today’s society, and studying the means with which 
it has been put to use in the past, we find one underlying fact, that 
automation does not just grow, nor is it, nor will it ever De, applied 
overnight to every activity of man. Were this possible, then automa¬ 
tion should be greatly reverenced for we should suddenly have achieved 
that long looked-for utopia. 

Automation’s applications are a studied piecemeal process, created 
only after its need is recognized and measured and then only after its 
cost is weighted against that need. 

Its creation is not a product of a moment or of one individual. 
Generally it is a result of years of effort, of trial and error, and the 
production of many creative minds employed to answer the question 
of how. 

Sometimes the need is recognized and known to exist; yet the end 
product to satisfy that need can only be made commercially by this 
automation. I have with me a new type of tin can to exemplify this 
problem. 

Gentlemen, for 3 years we have wanted to make this can. The 
can lid has got a little piece of wire built into it. We call this the 
zipper can, because you can take that little piece of wire, and if you are 
not careless you can pull it around like this and the can is open. 

We made these cans. We cannot sell the tops because we cannot 
make the tops for the price that we can sell the tops, and we have only 
tried 3 years to make the machines to make the tops. 


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There is a lot of development work yet necessary. This is an im¬ 
perfect problem, as you see. Furthermore, we cannot make it. It 
must be made automatically, with automatic machines. Successful 
automation could be referred to as the “accumulative correction of 
errors.” 

In our narrow field of the application of automation we never pro¬ 
duce a machine or appliance that is not obsolete before it is shipped. 
Every machine we build can be improved upon and often is by our 
competition or customer. Every repeat order for a piece of automa¬ 
tion produced by us can be bettered. The decision as to whether we 
try to do so or not is economic, a measure of the selling price, the cost, 
and the degree of success of the previous model. 

automation’s products and byproducts 

The production of automation can only result in good for society as 
a whole, and it is gratifying to see that almost every article on the 
subject, including those written by the labor leaders, express this 
thought. 

It is true that in the past many attacks have been made upon certain 
applications of automation, but never for long if the innovation truly 
freed man’s hands and produced more goods with less work. 

On the other hand, it is equally as axiomatic that the introduction 
of automation has and will create dislocations in the labor force— 
these may affect a few or many; they may be departmental wide, plant 
wide, or community wide. 

It is also true that while upon the whole the result of automation will 
upgrade the vast majority of labor and make available more and more 
leisure time, that there will be those cases where, because of age or lack 
of will or mental inability, some will be downgraded. 

But when a radio poll in Detroit showed that listeners feared auto¬ 
mation next to Russia instead of welcoming it as the basis of the well¬ 
being of the city, the magnitude of the misapprehension and false 
fear of a large portion of our society is better understood. 

This type of reaction is similar to the reaction of a large section of 
our society toward atomic energy. Only recently are the people of 
our country awakening to the human benefits of atomic energy, and 
then only after a great national effort to publicize the “atoms for 
peace” movement. 

RESPONSIBILITY CREATED BY AUTOMATION 

Accepting as facts the broad conceptions and without exploring in 
more detail other causes and effects, I should like to be so hold as to 
add a few of my personal thoughts on the responsibility that the three 
major sections of our economy, industry, labor, and Government, 
should take toward automation. 

All three of these sections of our society must undertake to support 
and encourage the orderly growth of more and ever more automation. 
They must constantly publicize and educate all of society of the good 
that its greater productivity will create. 

Industry through enlightened management and ownership needs to 
recognize that the increased production—that is, the increase in the 
wealth produced—must be divided between labor and owners in a fair 


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manner. The division of this increase cannot be only between higher 
wages and more dividends. Some of the increase must be usedto sup¬ 
port the retired and displaced worker. More and more of it must 
be plowed back into capital. If automation’s trend is to continue, in¬ 
dustry must constantly have faith in the future and spend more for 
development, expansion, and plant improvement. 

Labor must not be shortsighted and demand so large a share of the 
added wealth that it will stifle the ability of industry to place more 
capital per worker at labor’s disposal. 

Government at the local, State, and National levels must not neglect 
their obligation to enforce a fair division of our created wealth and 
must not spend their share ineffectively or wastefully. 

If there was ever a proper place for the encouragement of automa¬ 
tion, it is in government, for its benefits there can only result in the 
good of the society as a whole. 

Industry, through education within its own units and divisions, can 
improve the humanitarian relation toward its workers, can seek to 
encourage better means of lightening the burden of the displaced 
worker, and can through education and training assist in the upgrad¬ 
ing of its labor. It is, of course, true that many units of industry are 
making great progress along these lines, but many others are not. As 
you all know, labor relations’ policies of today are a vast improvement 
over those of only a few years back. Both labor and Government 
should recognize and differentiate between those units of industry 
which are progressive and those that are not and encourage the pro¬ 
gressive units. 

Labor, and particularly those divisions that are organized, have in 
many instances of late years better recognized their share of responsi¬ 
bility, but much improvement can be asked for yet. It is not enough 
any longer for the unions to demand for their members only higher 
wages and more fringe benefits, but they must seek to find better means 
to tax their membership for the aid of the technologically displaced 
members. This may sound like heresy to some labor leaders but it has 
been a long established and accomplished fact by others, much more 
progress can be achieved, however, in this field. 

There should grow within labor a better knowledge of the “harm to 
all” that the encouragement of featherbedding does, for if automation 
is good for all, then inversely featherbedding is bad for all. 

Nor will the guaranteed annual wage, in my opinion, prove to be 
the blessing that some of its authors think it will be, and large sections 
of labor can never fall under its protective wing. 

Labor must also recognize and educate its members that it is the 
duty of all workers to deliver an honest day’s work and that a dole of 
any kind from any source i% a harmful thing, a temporary measure 
to assist in cases of hardship; that it must not be abused and that every 
effort humanly possible should be exerted to get off and back to 
gainful employment. 

Government also on all levels can be mindful of these factors and 
should not establish allowances for unemployment either so low as 
to be of no help or so high as to encourage idleness. Much better con¬ 
trol over this aspect of the problem can be done at local and State 
levels than is now being done. 


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Labor by better cooperation with industry can accomplish much 
more than is now being done to improve the education and upgrading 
of its members. If by no other means than through a publicity cam¬ 
paign on its part, they can explain the good of automation and en¬ 
courage their members to prepare themselves for better and more 
responsible jobs. 

Government responsibility being for the good of all must keep the 
confidence of the governed nigh—must be mindful of the good of the 
whole even at the expense of the few. This does not mean that Gov¬ 
ernment has to accomplish everything by legislation, particularly 
at the national level. Much can be accomplished better by the orderly 
assembling and evaluation of facts—just as this committee is con¬ 
stantly doing—then armed with the facts give proper emphasis and 
publicity to the conclusions. Many correcting measures can then be 
taken at local and State levels with better and more equitable results. 
Such results can assist in shortening the suffering in distressed areas. 

A recognition on the part of all sections of our society from the in¬ 
dividual to the Congress of the people must realize that our society 
must be kept dynamic and its produced wealth per capita kept ever 
increasing. 

In conclusion, automation must be encouraged, means must be 
found to force its growth, by more liberal tax and depreciation poli¬ 
cies, by better aid to our small and growing progressive concerns, and 
by assistance to the displaced worker without destruction of his will 
or need to work. 

The Chairman. Senator Flanders, since this gentleman represents 
the very type business that you spent your life in, I think you are 
the proper one to interrogate him, so I shall now yield to you for 
myself and also for the staff. Take such time as you desire. 

Senator Flanders. Mr. Chairman, I don’t want to take the exclusive 
responsibility of interrogating, but I do appreciate the opportunity. 

I would like, first, to inquire, Mr. Barton, whether you have taken 
into consideration,the effect this “Zipper” can is going to have on 
the can-opener industry ? 

Mr. Barton. Yes, sir; I thought about it. If we can ever make it 
work it is going to be very hard on the can-opening industry. 

Senator Flanders. I kind of like that type of opener which is stuck 
on the kitchen wall. The first one of those I ever saw was made in 
Vermont, by the way. I don’t see but what that can-opener industry 
has got to look out if you get this type can going. 

Now, in your testimony you say “Many of us have incorrectly de¬ 
fined or spoken of automation as the second industrial revolution.” 

In my conversation with Mr. Carey I indicated my belief that the 
shift to continuous production, commonly called mass production, 
was a revolution of sorts. That raises the question as to whether this 
automation is anything more than that. I take it, that your point 
of view is that automation is a process that is going on all the time? 

Mr. Barton. Yes, sir; and is a part of a process that has been going 
on all the time. 

Senator Flanders. It has been going on all the time and I take 
it that, in your judgment, it is not of a cataclysmic sort; it is just 
one of the things that happens, and is going on. I say of a cataclysmic 
sort; I mean of a sort which requires emergency measures to meet it, 

Mr. Barton. I don’t believe it is required. 


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Senator Flanders. In your paragraph on industry, you do indi¬ 
cate, however, that it is in the nature of a continuing adjustment. You 
speak of increased product which must be divided between labor and 
owners in a fair measure, some for the retired and displaced workers, 
more plowed back into capital, et cetera. Steps do have to be taken 
to meet such problems, but they are general measures, I take it, which 
you feel apply to all improvement in production ? 

Mr. Barton. Perhaps I have given you slightly the wrong interpre¬ 
tation of my thinking there. It seems to me that in the past we nave 
only had one thing to divide, and that was a greater productivity 
that man has been able to produce. That has been divided between 
more capital and higher wages, and shorter hours, and I indicate 
here, or I wish to indicate here, that I think that trend will continue, 
and is healthy. 

It is a question of the evenness or equitableness with which it is 
divided and, of course, in any individual case it may not be properly 
divided, but as society as a whole finds a level for its division. 

Senator Flanders. I wanted to question your reference to “tech¬ 
nocracy.” To me that means a movement which got underway during 
the years of the depression, which proposed to turn our whole eco¬ 
nomic system over to engineers and had a faintly or less faintly Fascist 
■connotation. So far as I am concerned, I hate to see that word revived 
which, to my mind, represented a movement which fortunately has 
disappeared. I hate to see it used here in any favorable sense. 

The Chairman. May I impose upon you, Senator Flanders, to act 
as chairman until you finish here and then adjourn the committee 
until 2 o’clock ? Mr. Barton is the last witness this morning. I have 
another engagement. 

Senator Flanders (presiding). Yes, sir. Now, Mr. Barton. 

Mr. Barton. Well, perhaps I don’t like the word “automation” any 
better than I like the word “technocracy.” Technological improve¬ 
ment—however, I accept your criticism in that respect. 

Senator Flanders. After all, that is a comparatively small matter 
in this discussion. 

Mr. Barton. I don’t think it is pertinent in the broad sense. 

Senator Flanders. The point I do get from your discussion, I have 
already mentioned. You feel that what is called automation is a part 
of a continuing process that has been going on for a long time, and 
will go on, we hope, for a long time to come. I presume you feel that 
this long, continued process (foes at times introduce a heavier burden 
of problems and at other times is easily absorbed. 

Mr. Barton. If you are speaking of the economy as a whole, I be¬ 
lieve so, but if you are speaking of an individual within a plant, or a 
section of a plant, then there may be dislocations. 

Senator Flanders Mr. Carey spoke of the advisability of meeting 
these individual cases in the plant so far as possible, or by society, 
retraining. It does come as a crisis for an individual. Now, would 
you say, in the first place, that developments such as you have de¬ 
scribed, which have been undertaken by your own company, have in 
general effected unfavorably mostly the unskilled worker or the skille d 
worker? : 

Mr. Barton. Well, sir, I believe that, as a whole, certainly within 
the last 50 to 100 years, all of the technological prograss has produced 


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a requirement of higher skills on the part of the labor force. Today 
it is getting so that it is increasingly difficult to get people that wish 
to do menial manual labor. We are upgrading by our educational 
system, and the fact that we are keeping more and more of our youth 
in schools, we are preparing them. Not that it is perfect preparation, 
by any means, but the trend is there. 

Senator Flanders. Are you saying that it is hard to get the un¬ 
skilled man, but that there is less need tor him ? 

Mr. Barton. I trust there is. I know there is less and I think there 
should be even less. 

Senator Flanders. Have these remarkable and extensive automa¬ 
tion developments resulted in a higher or a lower percentage require¬ 
ment for unskilled labor ? 

Mr. Barton. Maybe I can give an example that will answer that 
specifically in the bluebook. I beg your pardon. It is the last one, 
the electrical controls. In the electrical control section, the next to 
last page, on the left-hand part of the page on that spread are two 
photographs of a dragline control. That automatic control was em¬ 
ployed in one of the largest, if not the largest, dragline in the country, 
in Florida. 

It completely and automatically controls all operations on a great 
big dragline. 

Senator Flanders. What is the nature of the industry ? 

Mr. Barton. It is a mining industry in Florida, mining—it is Inter¬ 
national Minerals. This received a considerable amount of publicity 
in the technical journals, and it replaced not so many workers, but it 
is an air-conditioned cabinet, and the operation is now performed by 
a graduate engineer that they put inside of this, and, true, he does the 
work of 4 or 5 draglines, but certainly in that particular case it up¬ 
graded the individual operator. 

Senator Flanders. Would you make that as a generalization, 
namely, that, in general, the highly develop automatic processes raise 
the percentage of skill required ? 

Mr. Barton. Very positively, particularly in so much as we put in 
these machines, as they are increasing in number in the plants, we 
must have more and more higher skilled individuals to maintain them 
and keep them in operation. 

Senator Flanders. Years ago—I forget just when—I visited one of 
the early developments of this sort. The name of the company has 
escaped me. It was in Milwaukee, and they were making automobile 
chassis frames. I don’t know whether you can name that. 

Mr. Barton. Yes. That was the A. O. Smith Co. 

Senator Flanders. That was it. I looked into the room where this 
thing was going on, from raw material to a finished automobile chas¬ 
sis name, and I didn’t see much of any men. There were 2 or 3 men 
around watching the product, and then I made further inquiry and 
went to an adjacent building, where there were quite a lot of highly 
skilled mechanics making and repairing the tools, making repairs on 
parts of the machinery which had been replaced by standby parts, and 
so on, and it struck me at that time—how many years ago was it s 

Mr. Barton. It must be 25. 

Senator Flanders. Is it still running? 

Mr. Barton. I believe so; yes, sir. 

45006 O—50-IT 


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Senator Flanders. It struck me very strongly that as compared 
with the conventional processes of making the chassis frame, that the 
degree of skill required to keep this thing going was very much higher 
than the grade of skill required to make chassis frames for the old 
process. 

Mr. Barton. That is exactly what I tried to say before. 

Senator Flanders. Of course, that is contrary to what you might 
call the popular point of view, which is that developments of mis 
sort make the workers into just low-grade machine tenders of some 
sort. You feel that it does definitely upgrade the percentage of skill 
required ? 

Mr. Barton. May I put it a different way? The more the trend 
is applied, the less the need for the unskilled, and the greater the need 
for the skilled, and therefore the greater the incentive, whether or not 
it is being answered correctly, by industry, Government, or the unions; 
the need is increasing for greater and greater skill, and therefore the 
urge on the individual to prepare himself is present, whether or not 
he does it correctly or not is another question. 

Senator Flanders. I have no further questions. 

Do any of the staff have any suggestions ? 

Mr. Ensley. No, unless Mr. Barton would like to comment on im¬ 
plications of what he has just now said for our educational program. 

Mr. Barton. Well, there are many broad economic problems that 
will always be with us, as to whether or not we as a society are properly 
preparing our individuals who make up that society in the proper 
manner, whether or not we are properly dividing the wealth of the 
country to give us a broader base of purchasing power, and 1 thing, 
and one thing only seems to be outstanding in that regard, in my 
opinion, and that is it seems to me that our Governments’ problem 
is a problem of keeping our society dynamic and having faith in 
themselves, because our Government is our society and we must keep 
our people with faith in the fact that we are going the right way. 

In my opinion, the trend is right. It should be encouraged. 

Mr Ensley. My question dealt more particularly with our educa¬ 
tional system. Are we turning out enough trained scientists, mathe¬ 
maticians, and so forth, to conceive, develop, and man the new 
technology ? 

Mr. Barton. I don’t believe we are. I believe that it would be good 
if we could find ways to encourage the scientific schools to expand and 
train more students for the future. They will be needed more and 
more in the future. 

I haven’t got a specific answer of how. 

Mr. Ensley. The implications of automation also are for shorter 
hours of work and more leisure time. 

Mr. Barton. And that means more intelligence, if you are going 
to use it properly. 

Mr. Ensley. That is the only question I have. 


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(The material referred to by Mr. Barton dealing with the Rockford 
Ordnance plant is as follows:) 


[Reprinted from Machinery, February 1946] 


The Automatic Manufacturing Plant—Mass Production Shop of the 

Future 

A plant designed and built by the W. F. & John Barnes Co. during the latter 
part of the war for the manufacture of high-explosive shells suggests possibili¬ 
ties for mass-production plants for peacetime manufacturing that will practi¬ 
cally constitute a single automatic unit 


(By Erik Oberg, editor, Machinery) 


Many of the wartime developments will have a profound effect on the manu¬ 
facturing practices employed in making peacetime products. Bold and ingenious 
ideas that would hardly have received a hearing in peacetime days won accept¬ 
ance in the wartime emergency because of the urgent demand for more and ever 
more war materiel. A wartime idea that successfully materialized was the 
155-millimeter high-explosive -shell plant that was designed and built by the 
W. F. & John Barnes Co. during the latter months of the war and was just 
ready to be placed in operation when the fighting ended. This plant may well 



A group of two threading machines with a robot mechanism in the center for 
automatically loading and unloading them. 

be termed an automatic mass-production factory. Here heavy parts, weighing 
in excess of 125 pounds, are handled mechanically from the time the billets 
enter the heating furnaces until the completed shell, after having passed through 
all machining, heat-treating, and other operations, is ready for inspection. 

This plant was conceived and built by the executives, engineers, and production 
men of both the machine tool and ordnance divisions of the Barnes organization. 
Without the complete cooperation of these groups, the results accomplished 
could not have been achieved. The Barnes organization not only engineered 
the plant, but engineered and built the bulk of the special machinery, and worked 
with the engineers of other concerns that supplied special equipment, offering 
them engineering ideas as to what would be required, and then working out the 
details with the supplying companies* engineers. 



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The present article will briefly describe the essential equipment in this auto¬ 
matic shell-manufacturing plant, not with the idea of presenting a treatise on 
shell manufacture, but rather of showing the possibilities of this type of manu¬ 
facturing plant as applied to peacetime mass production. 

It should be noted that in the design of the facilities of such an automatic 
plant, all ideas much begin to take form with the building itself. A system 
of intercommunicating trenches and tunnels is incorporated to carry all of 
the various services and to provide for the automatic handling of chips. Even 
the foundations are designed with a view to the ultimate purpose of the plant, 
and are tied in with the main tunnels to provide easy access for maintenance 
of the services and for proper plant housekeeping. Special attention is given 
to the exhausting of fumes and gases and to the maintenance of suitable shop 
temperatures. As an example of the latter considerations, it might be mentioned 
that in the forge shop a full-length roof ventilator is coupled with louver control 
of windows at the floor level, in order to reduce the temperature in this area 
and to provide the best possible working conditions. 

In the design of the shell plant referred to, it was kept in mind that practically 
all manufacturing operations would be performed by women, and hence, to 
facilitate the operations, the controls were largely through pushbuttons. 

To avoid the manual handling of the shells, two fundamental types of equip¬ 
ment were provided—first, a complete conveyor system for transferring the 
heavy projectiles from operation to operation; and, second, a machine, on the 
success of which hung the entire handling process—a mechanical robot that 
would pick the shell (or other part) from the conveyor, load it into the machine, 
and upon the completion of the machining cycle, remove it from the machine 
and transfer the machined part to an outgoing conveyor. By synchronizing 
the motions of this mechanical robot with those of the machine through elec¬ 
tronic, hydraulic, and mechanical controls, it is possible for one operator— 
either man or woman—to obtain a production from the machining equipment 
that has been unheard of in past performance. 



Figure 1.—Typical robot mechanism used to automatically load and unload the 
equipment that performs machining operations on the shells. 


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Since the success of an automatic plant such as described hinges upon the 
possibility of handling heavy forgings or machined parts without the touch of a 
human hand and of loading and unloading the machines automatically, the robot 
mechanism will be referred to first. Figure 1 shows a typical mechanism of this 
kind used for automatically loading and unloading shells in the operation of a 
four-station center-column machine. 

This robot mechanism consists of a base on which is mounted a rotary four¬ 
sided center column. On each of the four sides of the column is mounted a 
vertical slide which serves to bring the shell or other part into and out of the 
holding fixtures in the machine. On the top of each of these slides, horizontal 
ways have been machined which carry the mechanical hands that transport 
the shell to and from the conveyors and in and out of the machines. Briefly, 
the operation of this mechanism is as follows: 

The mechanical hands advance toward the incoming conveyor, and each hand 
clamps a shell. Then the mechanism and slides move back toward the center 
column of the machine, withdrawing the shell from the conveyor. The robot 
machine is now indexed, and the hand slides advance into the machine that is to 
perform an operation—in this case a rough-turning machine. The vertical slide 
next moves upward so that the open end of the shell, properly faced square in a 
previous operation (in this case in a centering and cutting-off machine), moves 
over an internal mandrel against the spindle shoulder. The tailstock then moves 
into the machined center in the base of the shell, after which the mechanical 
hands are released. With that release, hydraulic pressure expands the jaws of 
the internal mandrel, clamping the shell for the turning operation. The vertical 
slide now moves downward, the hand slide moves toward the column of the 
loading machine, and the process is reversed for another loading operation. 

When the shells have been rough-turned, the robot reverses its loading pro¬ 
cedure by moving in empty, picking up the finished shell, indexing to the proper 
position, and releasing the rough-turned shell to the outgoing conveyor. The 
operation of removing the shell from the conveyor and loading the machine, 
or the unloading of the machine and depositing of the shell on the outgoing 
conveyor, requires 30 seconds. 

It will be noted that 1 robot serves 2 machines and that 1 woman operator 
controls the 3 pieces of equipment. It is estimated that the production from this 
unit of 3 machines is approximately 10 times the production of the same personnel 
using standardized shell-turning lathes. 



Figure 2.—View of the furnace room of the forge shop showing two 28-foot 
Salem rotary furnaces which are automatically loaded with billets and un¬ 
loaded by 2 women operators employing pushbutton and lever control. 


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Another point that was considered in the entire engineering of the plant was 
the control of the movement of the shell so that it was never necessary to dump 
coolant out of the inside of the shell. In some automatic arrangements for shell 
turning, there are specific operating stations arranged merely to turn the shell 
upside down, so as to throw out the coolant. This is not necessary if the shell 
is moved through its various operations with the nose downward. 

While a robot mechanism of the type suitable for the work to be handled is 
perhaps the basic conception in an automatic manufacturing plant such as 
described, there are many other unique features in the production line that aid 
in making all the operations completely automatic. These features, as employed 
in the manufacture of shells, will be briefly reviewed in the following two para¬ 
graphs, but it should be noted that with slight variations they can be applied 
to a great variety of mass-production parts. 

In the shell-manufacturing plant here described, there is an automatic pallet 
mechanism for loading the heat-treating furnaces; there is a complete control of 
the hot nosing operation, by which perfect alinement and temperature control 
can be maintained; there is a system of production-line gages for checking all 
important items as the shell moves down the production line; there is a unique 
method for banding that insures an absolutely gastight fit of the band on the 
shell; an dthere are automatic features applied to the control of gages, tools, 
cutting compounds, and all other elements entering into the manufacturing 
process. 

This control of gages and tools could be greatly elaborated upon, since it con¬ 
stitutes one of the important features in the success of this type of automatic 
manufacturing plant. The shell, for instance, as it progresses down the con¬ 
veyor line, is automatically lifted into an electronic gaging device. The gaging 
is performed, and in some eases recorded on a chart, after which the shell is 
automatically placed back on the conveyor. 

In the case where the manufacturing processes begin with forgings, the success 
of an automatic production line depends materially on the weight, accuracy, and 
treatment of the forgings. Even the forging operations can be so engineered 
that the manual handling of billets and forgings is eliminated and pushbutton 
controls are provided for the main processes, including the operation of the 
rotary furnaces, forging presses, and similar equipment. As a result, in the 
shell plant described, the operation is so thoroughly automatic that all handling 
of the material at the heating furnaces is controlled by a girl at a pushbutton 
station. 

DETAILS OF OPERATION OF THE HEATING FURNACES IN THE FORGE SHOP 

Figure 2 shows two 28-foot Salem rotary furnaces used for heating billets in 
preparation for forging. In the center may be seen two women operators seated 
in front of control boards, by means of which the furnaces are automatically 
loaded with billets and the heated billets automatically removed and transferred 
to conveyors. Briefly, the operations are as follows: 

The billet, cut to the proper length, is automatically conveyed to the entrance 
door of the furnace. A woman operator, seated at the control board, handles, 
through pushbutton and lever control, the loading of the billets into the fur¬ 
naces. By the operation of these levers and pushbuttons, the following cycle is 
controlled: The jaws of the ram clamp a billet at the end of the conveyor. The 
furnace door opens; the ram advances into the furnace to a predetermined 
position, and the billet is deposited on the floor of the rotary hearth. Next the 
ram withdraws from the furnace and the operation is repeated until four 
billets have been placed in the furnace. The furnace door is then closed and 
the rotary hearth is indexed, ready for loading another groups of four billets. 
All of these operations are performed automatically, with one woman operator 
controlling the loading of both the rotary furnaces. 

The woman operater shown seated at the control booth in the background of 
the center of figure 2 controls the automatic unloading of the heated billets. 
The unloading of the hot billets and the control of the ram and door mechanism 
are the same as described for the loading process, except in reverse. 

The woman operater who controls the automatic unloading of the heated 
billets also controls the indexing of the hearth. Obviously, it is important 
that the billets be unloaded when they have reached the proper forging tem¬ 
perature; hence the removal of the billets from the furnace and the indexing 
of the hearth are tied together. 


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Figure 3.—Electric control board for the operation of a group of 2 machining 

units and 1 loading unit. 

The hot billets are unloaded onto a conveyor which delivers them to a water¬ 
scaling operation under 2,000 pounds of water pressure. The descaled billet is 
a preliminary sizing press prior to piercing, all of these operations being auto¬ 
matic like the rest of the installation. 

ELECTRIC CONTROL BOARD FOR OPERATING CENTER-COLUMN MACHINES 

One of the most interesting features of this entire automatic manufacturing 
plant is the ingenuity displayed in providing automatic control of turning, boring, 
and threading machines. The control board (fig. 3) is taken care of by 1 
woman operator, who controls the operations of 2 4-station center-column turn¬ 
ing machines. Two machines of this type are placed facing each other, with 
an automatic loader between the 2 machines, similar to the arangement shown 
in the heading illustration. The machines are designated left-hand and right- 
hand machines, according to their relation to the automatic loader. A left-hand 
and a right-hand machine and an automatic loading machine are referred to 
as a group. A control panel, such as shown in figure 3, is provided for inter¬ 
locking and controlling each group of machines. A system of lamps and push¬ 
buttons is assembled in this control desk, with indicators showing the operating 
conditions of the group of machines, and providing means for controlling their 
operation. 


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Figure 4. —Close-up view of tooling of a Barnes four-station center-column 
machine used for rough turning the forgings. 

The lamps on the control desk are wired so that they will burn at a low 
voltage when not picked up by the circuit controls. In that way, the operator 
will know that a lamp that is not lighted is burned out. A selector switch is 
provided so that the operator can turn off all lamps showing the control circuit 
condition when they are not in use. 

The upper panel on the control desk contains a system of lamps that will 
show the operator the condition of the control circuit if the machine stops 
during the automatic cycle or fails to perform one of its operating steps during 
a hand-operated cycle. This indication will localize any trouble in the machine 
controls, thus making it easier for any control failures to be located and cor¬ 
rected. The lamps in the upper control desk panel are arranged in horizontal 
rows and vertical groups. The top row of lamps indicates the condition of 
the control circuit at any place in the cycle or when the machine stops. 

The remaining rows of lamps on the upper panel indicate the condition in 
which the control circuit should be at the end of the step being performed by 
the machine. The left-hand group of lamps indicates the operating step that 
the machine is in when it stops. Thus, a comparison of the lamps in the upper 
row with the lamps in the row indicated by the step lamp that is lit in the 


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left-hand group will show which section of the control circuit has failed to 
operate. This section can then be checked to determine the trouble. Similarly, 
the vertical groups of lamps are arranged to indicate steps in the operating 
cycle in each of the two machines being operated. 

The lamps and pushbuttons in the lower panel of the control desk are arranged 
in groups according to their relation to the control circuit. Every possible con¬ 
tingency in the operation of the machines is taken care of, enabling the oper¬ 
ator to see at a glance how the steps in the operation of the machines are pro¬ 
gressing, and to operate the various controls as required. 

Separate pushbutton control boxes are provided for each machine and for 
the automatic loading machine for operation during a jog cycle. The jog cycle 
is used for testing and setting up the machines only. 



Figure 5. —Battery of Tocco high-frequency induction heating units located in 
their proper place in the automatic production plant. 


Figure 4 shows a closeup view of the tooling of 1 of the 2 Barnes 4-station 
center-column machines used for rough-turning the shell forgings. The machine 
consists of a main supporting base carrying a rotary table. This rotary table is 
mounted on a four-sided vertical column which carries the toolslides. On top 
of the column is mounted the maiq actuating mechanism, including the individual 
hydraulic controls and the electrical panels for each station. In principle, the 
machine consists of eight lathes mounted vertically around a center column. 

After two forgings have been positioned and clamped as described in connection 
with the description of the robot mechanism loading machine, figure 1, the center 
column indexes, bringing 2 more spindles to the loading position; and after these 
2 spindles have been loaded, the machine again indexes until each of the 8 spindles 
is loaded, 2 spindles being loaded at once. Then the toolslide is indexed and 
starts its machining cycle. This toolslide carries two banks of tools, one for 
each spindle assembly. The 6 tools are fed hydraulically into the shell to the 
proper depth, after which the entire slide feeds upward approximately 4 inches, 
completing the rough-turning operation. The seventh tool shown at the base 
and to the left of the chucked shell then takes a sweeping cut across the base of 
the shell, leaving only a small center for succeeding operations. 


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Figure 6. —Pallet mechanism which automatically loads shells into a heat- 

treating furnace. 


It will be noted that the machinery has been so designed that all tools are 
set in blocks which fit into predetermined positions on the machines, so that, 
when the tools are dull, the tool block itself is removed, sent to the toolroom, 
and the cutting tools sharpened and set to the predetermined position before it is 
returned to the production floor. 

AN EXAMPLE OF AUTOMATIC HIGH-FREQUENCY INDUCTION HEATING 

Figure 5 shows a battery of Tocco high-frequentcy induction heating units 
used to heat the nose of shells in preparation for the nosing operation. Obvi¬ 
ously, this equipment with slight modifications could be applied to numerous 
other parts in mass-production industries. 

After the rough-turned shell has been placed by the robot on the outgoing 
conveyor, it is conveyed to the Tocco induction nose-heating units. There are 
four of these units in each production line. The 4 units serve the 1 vertical 
hot-nosing press shown in the background. The rough-turned shells are kicked 
off at the machining stations, move down a conveyor onto a small slide which, 
in turn, loads them into the boxlike fixtures in which are mounted the heating 
coils. The nose is then heated a predetermined amount, so that in the hot-nosing 
operation the following conditions will be met: The exact contour, both internal 
and external, will be maintained; the exact amount of metal required for the 
nosing operation will be available; the proper volume of the cavity will be main¬ 
tained ; and there will be sufficient metal for the final facing operation to give 
the correct finished length. When the proper degree of temperature is reached, 
the shell is retracted from the coils and again kicked onto the conveyor on which 
it travels to the nosing operation. 

After complete inspection of inside and outside contours, volume, and length, 
the nosed shells are conveyed automatically to the pallet-loading mechanism 
shown in figure 6. When 10 shells have been assembled, as shown in this illus¬ 
tration, the pallet is automatically carried onto the transfer table which, in 
turn, automatically conveys it into the heat-treating furnace. 

GROUP CONSISTING OF TWO THREADING MACHINES AND A LOADING MACHINE 

As previously mentioned, the groups of machines that perform machining oper¬ 
ations consist of two machines with a robot-mechanism loading machine between 


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them. The heading illustration shows this arrangement. Here two threading 
machines are placed one on each side of the loading machine. The robot mecha¬ 
nism of the loading machine picks two shells from the incoming conveyor, auto¬ 
matically indexes to the threading machine, and loads the shells in the clamping 
fixtures attached to the machine. Collapsible taps then thread the nose and 
retract. Next the shells are unclamped automatically and removed by the robot 
mechanism, which then automatically indexes and places the threaded shells on 
the outgoing conveyor. This conveyor then transfers the threaded shells to the 
next work station for the performance of other operations. 

ANOTHER EXAMPLE OF AUTOMATIC MACHINING 

Figure 7 shows a six-station machine used for turning and forming the rotating 
bands. Note that here, again, the shells are removed from the incoming conveyor 
by the robot mechanism and loaded into the machine. After being placed in 
position by the robot mechanism, the shells are pushed into collet-type chucks, 
and having reached the proper point of location, are clamped. These chucks 
are so designed that every shell will be accurately located. There is no down¬ 
ward or upward movement of the shell throughout the clamping operation. The 
head of the turning machine is then indexed to each of five machining stations 
where the rotating band is successively rough turned, rough formed, and finish 
formed. 

The foregoing brief outline of a few of the operations performed in the Barnes 
automatic shell plant will doubtless prove sufficient to indicate that such auto¬ 
matic plants can be designed for the mass production of numerous parts and 
products for peacetime industries. Enormous quantities of parts can be pro¬ 
duced by such an arrangement with a minimum of physical effort and labor. 

As mentioned at the beginning of this article, it was not the purpose to present 
a complete description of the manufacture of shells, but rather to emphasize the 
possibilities of this type of manufacturing layout as applied to peacetime pro¬ 
duction. This plant, in its original conception and in its final detailed engineer¬ 
ing, is believed to present a basic idea for the mass-production plant of the future. 

This development has not only an industrial significance, but a social signifi¬ 
cance as well, because as man contrives to produce the things that he wants for 



Figure 7.—A six-station machine for turning and forming rotating bands. The 
shells are automatically delivered by conveyor and robot mechanism, and are 
then automatically clamped and machined. 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


his comfort and well-being with the least amount of expense and effort, the 
higher will be the living standards that he can enjoy. The automatic plant 
of the future is simply another link in the chain that provides more goods for 
more people at less cost and effort. 

Senator Flanders. This hearing is recessed. It will meet again in 
this place at 2 o’clock, with Secretary of Labor Mitchell as the witness. 

(Whereupon, at 12:13 p. m., the subcommittee recessed to reconvene 
at 2 p. m., same day.) 

AFTERNOON SESSION 

The Chairman. The subcommittee will come to order. 

We have with us this afternoon the Secretary of Labor, Mr. James 
P. Mitchell. 

When we first undertook this inquiry into automation, we naturally 
looked to the Department of Labor as a source of information on 
what this whole movement means to employment levels and indi¬ 
vidual workers. As I understand it, your Productivity Division is 
engaged in a series of studies trying to analyze the changes in the 
numbers and character of employees in places where automatic pro¬ 
cedures have been or are being introduced. You, I understand, will 
present these and some of the summary views to us this afternoon. 

We are also interested in your personal thinking as to the handling 
of the personnel problems involved. 

Since your Department is also making studies of productivity, we 
should like to have you add whatever you can to our understanding 
of the commonly used concepts and statistics on productivity. 

Mr. Mitchell, we are delighted to have you. You may proceed in 
your own way if you desire. 

STATEMENT OF JAMES P. MITCHELL, SECRETARY OF LABOR, 

ACCOMPANIED BY EWAN CLAGTJE, COMMISSIONER, LABOR STA¬ 
TISTICS 

Secretary Mitchell. Thank you, Mr. Chairman. 

I want first to thank you, Mr. Patman, for this opportunity to dis¬ 
cuss with you some of the very interesting developments which are 
taking place in American industry today. I believe that these hear¬ 
ings are contributing very significantly to a broader understanding 
of the great technological forces that are shaping our national life 
and economy, and I compliment the committee on its management of 
them. 

The several definitions which have been applied to the word “auto¬ 
mation” before this committee and elsewhere seem to indicate that 
the word itself defies accurate definition. I believe the reason for 
this is that the word carries with it two aspects, one of which is sub¬ 
jective and, therefore, varies from individual to individual. The 
other is tecnnical and, therefore, requires study and attention. 

Taking the first aspect of the word, we find that in some ways auto¬ 
mation means precisely what each individual man on the street thinks 
it means, for to a great extent it is a word which produces various sorts 
of fears in various sorts of individuals—fear of change, fear of tech¬ 
nology itself, fear of displacement, fear of unemployment, fear of 


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machines, fear of science in general. In this sense, automation is 
nothing new, since these same fears have been with us in one form or 
another ever since the first caveman resented fire. 

I am reminded, in fact, of the hearings held by the House Labor 
Committee less than 20 years ago. The discussion centered around a 
resolution that would have required the Secretary of Labor to draw 
up a list of laborsaving devices and a parallel estimate of the number 
of people probably unemployed as a result of their use. 

So the present discussion is not within an unfamiliar context. 

Taking the second aspect of the word, the technical one, we find 
that in a general way the word represents technological change, 
which surely is nothing new. It represents a movement certainly as 
old as the industrial revolution and probably older. Now, technologi¬ 
cal change varies, as we all know, in rate and degree. Its latest 
manifestation, coming as it has in a favorable setting of growth and 
prosperity, has appeared with relative swiftness and in some ways 
spectacularly. 

It has come with such devices as complex automatic systems, elec¬ 
tronic controls and regulators, feedback systems, transfer machines, 
conveyors, and the like. It has been attached to many self-regulating 
processes which have reduced the number of workers needed to per¬ 
form a given job. When you get down to specifics there is some 
argument about the precise definition of this second aspect of the 
word. However, we can all agree that it is the latest development in 
the progress of industrial technology, the latest step in the long search 
for ways to replace human energy with mechanical energy. 

APPLICATION 

Our preliminary studies in the Department of Labor indicate that 
there is no reason to believe that this new phase of technology will 
result in overwhelming problems of readjustment. 

I repeat, there is no reason to believe that this new phase of tech¬ 
nology will result in overwhelming problems of readjustment. 

For example, the Department recently completed a study of a large 
insurance company which has installed an electronic computer to 
process some or its records. 

(The information appears at the end of Mr. Mitchell’s testimony.) 

Secretary Mitchell. The company, like all companies that can 
best utilize the new technology, is an expanding one. Since it takes 
a long time to activate the complex new equipment, the company has 
been able to plan carefully the reassignment and retraining of the 
workers affected, so that no one will be laid off. The company has 
transferred some employees to other types of work and retrained others 
for work on the computer itself. To operate the high-speed electronic 
computer a number of people were selected from the staff for train¬ 
ing and assignment as programers and analysts and operators. New 
jobs that never existed before electronics was introduced were created 
elsewhere in the company. Even after installation of the electronic 
data machines, the company faces a clerical labor shortage because 
of the ever-expanding volume of business. It is still going to em¬ 
ployment offices for female clerical help for office work, as it did dur¬ 
ing the days of older technology. 


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264 AUTOMATION AND TECHNOLOGICAL CHANGE 

We found a somewhat similar situation in a radio and television 
manufacturing company that had introduced printed circuitry and 
automatic assembling machinery. 

(The information referred to appears at the end of Mr. Mitchell’s 
testimony.) 

Secretary Mitchell. The company eliminated a number of hand- 
assembly jobs in which women worked, and set up a number of higher 
paid jobs for operating machinery. No one, however, was laid off 
on account of the change. All job readjustments were made without 
disturbance, according to the seniority and working rules of the union 
agreement. The company timed the installation for a period of 
seasonal expansion and company growth. 

These two case studies are being submitted to the committee in de¬ 
tail. These examples, of course, are not necessarily representative 
of all industry or business. We are planning to prepare additional 
studies of other firms and industries. 

So far our studies show that only large companies producing stand¬ 
ardized goods for an expanding market have been able to use the 
more advanced types of industrial machinery. Operating in a con¬ 
text of high-business activity, with near-full employment, and indeed 
overtime m many industries, with widespread demand for products 
ranging from consumers’ goods to new factory buildings, these com¬ 
panies have been able to keep to a minimum the dislocation which 
has sometimes accompanied technological change in the past. 

Some fear that the diffusion of automatic production will be too 
fast. Others believe, however, that it will be introduced only grad¬ 
ually in view of its high cost and the long period of time needed 
for custom building and installation. History would indicate that 
broad technological changes are seldom abrupt, but rather that they 
take place in stages, affecting different industries at different times. 

The effects: The effects of technological developments, including 
the one termed “automation,” can be seen pretty clearly by looking 
at the historical record. 

In the past technological improvement has meant: unskilled work¬ 
ers have decreased, semiskilled workers have moved up into skilled 
areas, and skilled workers have approached the status of technician. 
In 1910, for instance, unskilled workers represented 36 percent of the 
labor force. Five years ago they represented only 20 percent. Semi¬ 
skilled workers from 1910 to 1950 rose from roughly 15 to 25 percent. 

We can expect these trends to continue under the stimulus of im¬ 
proving technology. 

Unskilled workers are leaving the farm, the building site, the mine 
and other activities. Our current high level of wages and employ¬ 
ment indicate that they are successfully making the transition to 
higher skilled jobs and better pay classifications. 

Improvements in industrial technology will reduce the number of 
boring, routine, and repetitious jobs. And, I believe we can expect 
that this will move all workers to a higher level of attainment and 
self-development. We can expect to see increased demand for workers 
with a high sense of responsibility and versatility, for mathematicians, 
engineers, and technicians of all sorts, for scientists and researchers. 
The worker of the future will require better basic education and 
better training than he gets now. 

Our knowledge is not at present complete enough to determine 
whether or not there will be hardships to specific groups as a result 


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of modern technological development. As I said at the outset, we 
don’t foresee any overwhelming problems of readjustment. How¬ 
ever, the application of new machinery to clerical, operative, and 
assembly type jobs may result in difficult transitional problems for 
women, many of whom are employed in these kinds of occupations. 
This is one of the areas which the Department of Labor is studying 
at present. 

Perhaps the most sensitive indicator of the overall rate of adjust¬ 
ment which is forced on the economy by technological change is the 
index of industrial productivity. Studies for manufacturing, where 
newest industrial techniques are most utilized, indicate that the post¬ 
war trend of productivity has been somewhat irregular—perhaps a 
little higher than the previous long-run trend, but not higher than we 
have experienced in periods of comparable length in the past. 

I propose later on to dwell on this at greater length. 

Another effect of technological change can be seen in those areas 
of our country where we have pockets of unemployment. While this 
problem involves many other factors besides technological change, 
it is part of the whole picture, and certainly every effort should be 
made to prevent an increase in the number of workers stranded in 
such distressed areas. 

This is a problem which must be met by management, labor, gov¬ 
ernment, and perhaps most importantly, by eacn individual com¬ 
munity. Like other problems arising out of technological advance¬ 
ment, it indicates the need in our country for the development of every 
worker to his fullest potential. As our scientists devise new methods 
and techniques in industry, so grows the opportunity for every worker 
to move to higher levels of attainment and individual fulfillment. 

Preliminary studies made by the Department indicate that we have 
a shortage ox skilled workers in this country today. As industry 
grows more complex, this shortage is bound to increase unless ade¬ 
quate training programs are set up. We must make sure that we 
do not waste our manpower, our most valuable resource, as we have 
wasted our other resources. 

In this connection, we cannot afford discrimination in the utiliza¬ 
tion of the skills of any group. We cannot afford to waste the poten- 
tion skills of 6 million Negroes. Neither can we afford to neglect 
the skills, aptitudes, and experience of mature workers over 45 years 
of age. 

Every effort must be made to prepare the American worker for 
the changes which lie ahead. Certainly in this respect education 
and training are of primary importance. And when a worker is quali¬ 
fied, certainly every effort should be made to insure his fullest utiliza¬ 
tion regardless of his age, his race, his religion, or his place of national 
origin. 

PROGRAM 

There is no disposition within the Department of Labor to minimize 
the problems that might be created by accelerated technological devel¬ 
opment. At the same time we feel there are abundant grounds for 
optimism and confidence about the future. 

Science and invention are constantly opening up new areas of indus¬ 
trial expansion. While older and declining industries may show 


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AUTOMATION AND TECHNOLOGICAL CHANGE 


reducing opportunity, new and vibrant industries are pushing out our 
horizons. This is the story of industrial America, and will continue 
to be. 

We are learning, too, that consumer desires are expansible. The 
new products emerging from industrial research laboratories are cre¬ 
ating the demand upon which entire industries may be erected. 

The prospect of such expansion does not lessen our concern for 
the individual worker who might be displaced. The Department 
of Labor has a deep and abiding interest in our changing technology. 
While the technical aspects of such changes can be described in con¬ 
siderable detail, the human aspects are often difficult to delineate. 

We are making, as I said, case studies of plants that utilize the new 
technology. This program is very small this year, but we hope to 
expand it. 

We are also initiating a series of community readjustment studies, 
selecting towns where there has been a reduction in employment op¬ 
portunities. We hope to determine the human, as well as technical, 
aspects involved in such areas and to investigate those practices that 
were most successful in meeting the community’s problems. 

We are giving close study to the development of the skills of the 
work force, through a pilot program authorized this year by Con¬ 
gress. In this field we are broadening our long-standing apprentice¬ 
ship programs. The problem of the older worker who is particularly 
vulnerable to the effects of changing technology is the target for a 
study just begun. 

I want to mention in connection with these tasks being undertaken 
by the Department of Labor the increasing activities in the States. 
At the local level, where technological change is first felt, it is very 
important to have an alert and effective system of employment offices, 
and a strong and well-administered program of unemployment com¬ 
pensation. These offices perform many important functions. First, 
they provide an alarm system by which to gage local displacement. 
Secondly, they provide an apparatus for the relocation of workers. 
The unemployment-compensation program furnishes income insurance 
for workers that cannot find work immediately. The States this year, 
I am glad to report, substantially increased the effectiveness of these 
programs. 

CONCLUSION 

I would like to leave you with this thought—in the past the de¬ 
velopments of industrial technology have always brought with them 
a higher standard of living. There is no reason to suspect that this 
will not be so in the future. Indeed, I have every reason to believe 
that the workers of this country will continue to receive their fair share 
of the fruits of their work. 

Management and labor have reached a degree of maturity and un¬ 
derstanding unprecedented in our history, and I believe we can have 
confidence that they will continue to negotiate successfully their dif¬ 
ferences at the collective-bargaining table. 

The industrial-relations problems of technological change are al¬ 
ways critical ones. Our studies so far have shown that companies 
which have installed new automatic machinery with a minimum of in¬ 
dustrial-relations problems have done so because they considered the 
problems of the individual worker in making the change. This per- 


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sonnel planning is as essential to modern industry as are the new 
machines, and I am sure that American management and labor realize 
this. 

Government, too, has a responsibility to help provide the proper 
climate in which growth can take place, industrial and otherwise. I 
believe that we are conscious of this responsibility and that we will 
be able to maintain the present climate in which our country and its 
people have grown so much and in so many ways. 

Last week, Mr. Chairman, you asked me in a letter to comment on the 
work which the Bureau of Labor Statistics has been conducting on 
the development of annual measures of output per man-hour in manu¬ 
facturing industries, and to report on our findings in relation to de¬ 
velopments in automation. 

Mr. Clague, who is the Commissioner of the Bureau of Labor Sta¬ 
tistics, is here at my side and both of us will attempt to answer any 
questions you may have after this short presentation in answer to your 
letter. 

The development of the annual measurement of output per man¬ 
hour in manufacturing industries is a resumption of work which the 
Bureau used to do in the years prior to World War II. The series 
was interrupted by the war because no data were available to measure 
the vast shift from peacetime to war industry production, and then 
later the shift back. However, the reconversion to peacetime produc¬ 
tion had been completed by 1947, when the first postwar census of 
manufacturers was taken. There was a sample census in 1949, and 
there have been annual sample censuses since then. For the past sev¬ 
eral years the staff of the BLS have been working with these census 
data, and with other information at their disposal, in order to obtain 
a measure of the rate of change in output per man-hour in manufac¬ 
turing; or, to state it the other way around, to measure the changes 
in the amount of labor required to produce a unit of output. 

We now have some measures bridging the gap from 1939, the last 
peacetime year before the war ? to 1947, when reconversion had been 
completed. We have annual indexes also for recent years through 
1953. 

Before we have a discussion of these figures, I want to stress the 
point that these data have limitations. Output per man-hour, or 

S roductivity, as it is often called, is not easy to measure and the 
ata we now have available are not as good for making these measure¬ 
ments as we would like them to be. We should also bear in mind 
(hat productivity is a ratio which relates the output of the economy 
or some part of it to the amount of labor usea in the production 
process. Such measurements reflect the influence of all the factors 
of production, the amount and skill of the labor required; the kinds of 
tools, equipment, and technology used; the raw materials processed; 
and the management skill in organizing the whole operation. 

In order to minimize some of the limitations and to aid in interpreta¬ 
tion the BLS has tackled the problem by preparing not 1 series of 
estimates, but 4 different ones. I shall not attempt here to describe the 
technical details of these measurements. For that purpose you should 
consult Commissioner Ewan Clague and the staff of the Bureau. 

There are two conclusions which can be drawn from these data, no 
matter which series is used. The first is that World War II inter- 

45006 O—50-18 


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AUTOMATION and technological change 


rupted the general prewar trend in productivity. During the 2 dec¬ 
ades between the wars, the annual rate of increase in output per man¬ 
hour for manufacturing averaged a little better than 3 percent per 
year. Over the 8-year period from 1939 to 1947, however, the average 
rate of increase was scarcely one-third as much. The great dislocation 
in peacetime industry caused, first, by conversion, and then later by 
reconversion, left manufacturing industries as a whole in 1947 at a 
productivity level far below the point which would have been reached 
had prewar trends been continued. 

The second point is that the average postwar gain in productivity 
does not appear to be extraordinarily high. Our current estimates 
show an average annual increase from 1947 to 1953, ranging from 3.1 
percent by one measure, to 3.6 percent by another. We find that 
World War I was followed by a recovery period, 1919-25, during 
which the average productivity gain was apparently well above 3.5 
percent a year, even if a decline in 1923 is taken into account. 

There is one more point which I must emphasize strongly. These 
averages which I have presented refer to manufacturing industries as 
a whole, and not to any particular industry. In actual fact, these 
averages represent many different rates of change in output per man¬ 
hour among the plants within an industry and among the industries, 
themselves. Our studies have shown that there are wide differences 
among plants and among industries. 

Therefore, these figures must be used with great caution. They 
should not be applied to specific industries since there is a possibility, 
or even a likelihood, that any one particular industry might vary 
widely from this average. 

Mr. Chairman, that completes any statement I may have. 

The Chairman. Thank you very much, Mr. Secretary. 

I would like to ask you just a few questions, and probably the mem¬ 
bers of the staff would like to ask some questions, too. 

You indicate that your case studies show no layoffs or other serious 
unsolved displacement problems. Is it possible that the firms you 
visited are not entirely representative of the situation in all industries? 

Secretary Mitchell. That is conceivable, Mr. Chairman, and we 
hope, as we extend our studies, to take in more industries and perhaps 
find some that do not conform to what we have presently encountered. 
It is conceivable that there may be industries, or companies, that do 
not conform to the pattern we set down here. 

The Chairman. Isn’t it a fact, then, Mr. Secretary, that the reason 
that those workers who have been displaced from their jobs have not 
been a problem is because they have been in industries, you might say, 
big industry, where they were in a better position to keep them on the 
payroll and shift them around from place to place, until they got them 
adjusted and re-trained. 

Small concerns, on the other hand, might not have been able to do 
that? 

Secretary Mitchell. That is conceivable, Mr. Chairman. I think 
that the point you make is right, plus the fact that the industries we 
have studied so far, which have introduced these technological im¬ 
provements, have been industries, as I pointed out in my statement, 
which have been expanding in their business. They have been able to 
absorb the people in their expanded business. 


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There is one other point I think one should remember, that if you are 
talking in terms of automation narrowly defined, as I pointed out in 
this prepared text, the problem of installation, the cost of installation, 
is such an enormous one that up to now it has taken a fairly sizable 
business to use these techniques. 

The Chairman. I think that is agreed by all the witnesses who have 
been before this committee, that only the large concerns will be in a 
position to use it to the greatest extent. 

You don’t know of any real displacement problems caused by auto¬ 
mation, so far, do you ? 

Secretary Mitchell. Well, I do not, Mr. Chairman. We have, as 
1 said, these pockets of unemployment, but those cities in which we 
have such problems have been the result of sick industries, shall we 
say, for some long period of time. We have a chronic situation, which 
is not exclusively the result of technological change, or what might be 
called automation. 

There are many other factors that enter into it. Certainly, when 
you look at the high level of employment, and the relatively low un¬ 
employment nationally, it is difficult to comprehend how great dislo¬ 
cations could be laid at the door of automation. 

The Chairman. Well, suppose an organization decides to install a 
machine that will take the place of a large number of workers, be it 
business, the State, and the Federal Government. 

Secretary Mitchell. In the first instance, I think, Mr. Chairman, 
that every company has a responsibility to its workers to see to it that 
every effort is made, within the company, to provide employment in 
accordance with seniority, and all the other personnel policies that 
may exist. Certainly, I don’t think we have come yet to the point in 
this country where workers should not he permitted to move around 
freely. We have devices built into our economy which protect the 
worker when he is involuntarily unemployed. 

That is the reason I firmly believe that we should constantly strive 
for an adequate unemployment compensation program, so as to insure 
income during periods of shift, during periods when people may be 
moving from one job to another. But basically, in a large company 
that is expanding, as I tried to point out here, management has a real 
responsibility to its people to see to it that in planning for techno¬ 
logical change the interests of the people are taken into consideration 
as much as the machine, or even more. 

The Chairman. And the company has a responsibility of trying 
to take care of those workers ? 

Secretary Mitchell. I would think so. 

The Chairman. Don’t you think the Government has the same re¬ 
sponsibility, Mr. Mitchell? 

Secretary Mitchell. The Government, by virtue of unemployment 
compensation programs. 

The Chairman. I mean for its workers. 

Secretary Mitchell. You mean Government employees? 

The Chairman. Yes, that is right, Government employees. I didn’t 
make myself plain. 

Secretary Mitchell. Yes, certainly, the Government has a respon¬ 
sibility for seeing to it that those people in its employ, who are doing 
a satisfactory job, should be protected. We have laws, civil-service 


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laws, and we have regulations, which insure that the worker is pro¬ 
tected. 

The Chairman. Suppose that you decide that you can eliminate a 
certain number of workers in a certain division by using automation, 
and you don’t have a place right then for those workers. Of course 
we are all in favor of progress and, strange as it may seem, we have 
not had one witness to appear before this committee who resisted 
automation, or genuine progress. Everyone has been in favor of it. 
They just want to make sure that the dislocations and displacements 
are taken care of in such a way that the workers will be provided for 
on the theory that society is being benefited generally by automation 
and progress, and that society, therefore, should make the impact less 
severe. On that theory don’t you think that the Federal Government 
has the same responsibility to its employees as a large concern has to 
its employees? 

Secretary Mitchell. Certainly. May I add that the built-in pro¬ 
tection of employees in Government from my own observation, in 
terms of civil-service regulations, and civil-service law, as passed by 
Congress, afford to Government employees a greater degree of joo 
security and protection than most businesses afford to their employees. 

The Chairman. Well, that brings up a point that is timely right 
now. It is about the plate workers over at the Bureau of Engraving 
and Printing. You probably know about that. 

Secretary Mitchell. I do. 

The Chairman. I have a letter here from Mr. W. A. Rahn, chair¬ 
man of the executive committee, Washington Plate Printers Union, 
Local No. 2, International Plate Printers, Die Stampers and Engrav¬ 
ers Union of North America, AFL. I do not know Mr. Rahn. I never 
heard of the organization that he represents, until this morning I re¬ 
ceived a letter. But I will read it to you. It is addressed to me. 

On Friday, September 23, notices were issued to 48 plate printers employed 
at the Bureau of Engraving and Printing that their services as plate printers 
would terminate at the close of business on October 31,1955. The reasons given 
for this action is a decrease of 40 percent in currency requirements since fiscal 
1953 combined with an increase in currency production of 101.6 percent since 
1949 due largely to added diligence on the part of plate printers aided by the 
use of technological improvements on the presses upon which currency is printed. 
While but a small portion of the estimated $1,350,000 savings contemplated for 
fiscal 1956 are reflected in the salaries of these 48 plate printers, the major part 
of this saving would still be accomplished if these men were not separated 
from their jobs. 

Our representatives accompanied by top ofacials of the A. F. of L. and Gov¬ 
ernment Employees Council, A. F. of L., have exhausted every effort with 
Treasury and Bureau officials to avert this action before bringing it to the 
attention of Congress. 

Since this action was delayed until Congress was not in session, we respect¬ 
fully request that you urgently appeal to Secretary of Treasury Humphrey to 
postpone this action to permit us suf9cient time and an opportunity to present 
to Congress conclusive evidence certified by Ernst & Ernst that the action con¬ 
templated is not necessary, is most unfair, and may cause a serious shortage of 
highly specialized craftsmen in the not too distant future at the Bureau. We 
have gone to considerable time and expense to gather this evidence which re¬ 
flects a more positive picture of the future than the thinking prompted by this 
shortsighted policy contained in the contemplated layoff of these 48 men to 
reduce the present high inventory of currency at the Bureau. There is more 
at stake in the operation of the Bureau, if it is to be operated efficiently, than 
the mere $400,000 the total savings of 48 plate printers’ wages this year. 

Since there are so few days left before this action is to be taken on October 31. 
your most prompt attention will be greatly appreciated. 


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I did think it was timely that the Government should take a stand on 
this question, so I wrote Secretary Humphrey this morning. I sent 
him a special-delivery letter earn this morning, and I am sure he 
received it by now. Therefore, I feel privileged to read the letter 
I wrote to him. 

Dear Mb. Secretary : It looks like the effect of automation is being felt on 
48 plate printers employed at the Bureau of Engraving and Printing, the first 
in the Government It is my understanding that they have been given notice 
that their employment will cease October 31,1955. 

The Subcommittee on Economic Stabilization of the Joint Committee on the 
Economic Report, of which I am chairman, has been conducting hearings on the 
subject of automation, and such hearings are going on all this week. 

There is one thing I have been impressed with and that is the business or 
industry affected should retrain and take care of its employees, who are affected 
by automation. At the present time, automation is principally in the major 
companies and they are in the best position to take care of any displaced em¬ 
ployees. It is my belief that it is just as much the duty of Government to take 
care of its employees as business or industry. 

The notice of termination of these employees brings the question before you 
for consideration. In other words, will Government attempt to do for displaced 
employees what Government will expect private industry to do with them? 

Pending this decision, which I am sure you will need some time to consider, I 
sincerely hope that you will cancel the notice of termination until the next 
session of Congress, which is a little more than 2 months off, can pass on the 
question. I believe you will agree that it is a major policy decision that Congress 
should bear some responsibility on, as well as the executive branch. 

I am not going to ask you any questions about it, but I do sincerely 
trust, Mr. Mitchell, that you and the other members of the Cabinet, 
and those charged with administration policy, will give serious con¬ 
sideration to this. I believe it would be the first time that this par¬ 
ticular question has come up—at least I haven’t noticed it coming up 
before—and I believe it is very important that a policy decision be 
made if we are going to insist that business and industry trike care of 
their workers. If we are’going to expect that, I think we want to be 
consistent. While we don’t want to block progress and we are not 
doing that, we want to take care of the workers by retraining them 
and placing them into other jobs, if at all possible to do so. I am 
sure you share my views in that. 

Secretary Mitchell. Certainly everything I stand for, Mr. Patman, 
puts the workers’ interest in matters of these kinds at the top. It 
seems to me, and I am sure that you would agree, that it is also in the 
interest of Government to see to it that its operation is carried on in 
the most efficient, economical manner. 

I am sure, too, that in accordance with the rules and policies of the 
Civil Service, these employees, or any other employees of Govern¬ 
ment, are given every opportunity for transfer to comparable jobs 
where they are available. 

The Chairman. Mr. Moore, would you like to ask any questions? 

Mr. Moore. Well, as simply a problem of personnel administration, 
how should the introduction of labor-saving or labor-displacing proc¬ 
esses be brought into the picture? What are the best personnel 
relationships in handling that? 

Secretary Mitchell. Mr. Moore, it seems to me that would vary by 
the company, by the type of change that is being made, and the ques¬ 
tion of whether or not there is a union in the company. There are 
many factors that would indicate that you do this on tlie basis of the 
facts as they are. Generally, it would seem to me that if you are going 


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to allay this fear, which this word seems to create, employees who may 
be affected need to know, either through their union representatives, 
or directly, if there is no union, what the company’s plans are, what 
they propose to do, how it affects the individual employee. I think 
the success of these companies which have introduced these labor- 
saving devices with a minimum of industrial relations problems, has 
been due to a recognition that the individual worker needs to know 
what the plans are. I think that is one of the cardinal principles in 
the introduction. 

Mr. Moore. You spoke of pockets of unemployment, and Mr. Reu- 
ther mentioned a phrase which seems to be going about, namely, that 
automation in Detroit means unemployment in South Bend. What 
can be done about these pockets of unemployment ? 

Secretary Mitchell. There are many things that can be done, Mr. 
Moore. Tiie Department of Commerce and the Department of Labor 
presently are trying to assist these communities. When I talk of 
sockets of unemployment, I am referring to those communities which 
lave had chronic unemployment for a long period of time. There is 
no easy solution to that problem. 

For example, in some of the coal-mining regions, where the problem 
is not the result of technological change, as such, or automation, but 
it is the result of new types of fuel, or the result of many things— 
there has to be, as I indicated here, a concentrated look at the problem 
by the community, by the State, and perhaps by the National Govern¬ 
ment. 

Mr. Moore. This question perhaps is one that Mr. Clague rather 
than you, Mr. Secretary, would want to address himself to. Several 
times during this hearing the distinction between production workers 
and nonproduction workers has come up. It disturbs me a little bit, 
because one of the first tasks in a beginning economics course is to 
try to get across the idea all work is “productive” if people are paid 
for it. That the Bureau of Labor Statistics should make this dis¬ 
tinction, I am sure is based upon good and sufficient reasons. 

I am wondering if you could explain what the distinction is in your 
statistics on this level? 

Mr. Clague. Yes, I would be glad to do that. 

The production workers include those who are actually in the plant, 
including the skilled workers, and all others up to and including the 
management in the plant itself. 

Mr. Moore. Would a foreman be a production worker? 

Mr. Clague. A working foreman, would be a production worker. 
The supervisory foreman belongs to management. We would include 
all the people in the plant, except the management people. I would 
like to check that to make sure about the foremen. 

Mr. Moore. If there were operators of say an air-conditioning sys¬ 
tem in the plant they would be production workers ? 

Mr. Clague. They would be production workers. The kind not 
listed as production workers are those who are in the central office 
building, for example, where you might have the accountants and the 
research staff, if any, and the top sales staff, and people of that sort, 
who are not in the plant. 

Now, the reason we draw this distinction is that these production 
workers are generally paid by the week, or by the hour. They are 
the ones whose man-hours are generally kept by the company. These 


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other workers are on semimonthly or monthly payrolls, and are kept 
on a separate payroll by the manufacturer. So in collecting average 
earnings per week, or average earnings per hour, of the workers in 
the plant itself, we have to segregate these other types of workers. 

We don’t like the implication that these others are nonproductive. 
This term “production workers” has grown up over the years, and 
we have just continued to use it. We naven’t found any other good 
term to distinguish them from what you might call overhead workers, 
who are productive, also. . 

Mr. Moore. Would these so-called programers, for putting projects 
on to automatic punchcard systems in a plant, be production workers? 

Mr. Claque. Yes. They would be working right with the ma¬ 
chines. Those we would count as production workers. It is the 
people who are in another place, for example, researchers doing lab¬ 
oratory research in another building. Those men would not be 
counted in our production workers. 

Mr. Moore. But custodial personnel on the other hand would ? 

Mr. Claque. Yes. 

Mr. Moore. I suppose the distinction is then extremely arbitrary ? 

Mr. Claque. It is convenient. In getting our employment figures, 
for example—by the way, we get both types of figures from employ¬ 
ers—we separate production workers, the men who work by the hour 
and draw pay accordingly, so that we can develop statistics of earnings 
per week and per hour. We cannot develop such figures for the other 
workers because their hours are not kept separately. 

Secretary Mitchell. I think, Mr. Moore, it was my own experience 
that the distinction in a company is made on just this broad base 
that Mr. Clague outlined. You don’t hear the words “production 
workers.” You hear hourly rated, monthly rated, or weekly rated 
people. That is the distinction. 

Mr. Moore. As a former accountant, I understand the necessities 
for arbitrariness in such distinction as that between direct and indi¬ 
rect. That is, primarily, whether you can charge the cost directly 
to the product or whether it must, as a practical matter, be spread 
through some overhead burden-spreading process. 

Mr. Claque. In our studies we use the words “direct” and “indi¬ 
rect” somewhat differently. We find that in the plant itself when 
drawing up the man-hours of labor, you will have the direct-produc¬ 
tion worker, who is processing the material. Then there are machin¬ 
ists, custodial men, and a lot of other people who could be called 
indirect labor, but they would all be in this group of hourly rated 
workers in the plant. So we use a somewhat different distinction 
there. 

The Chairman. Mr. Ensley. 

Mr. Ensley. Mr. Secretary, the witnesses have indicated that in 
this process of technological development we are upgrading employees. 
They are moving to better jobs, requiring more slblls and more tech¬ 
nical training. How are we going to employ the people who make 
good routine workers, but may not have the basic stuff or the education 
or background for these more skilled positions ? 

Secretary Mitchell. I think, Dr. Ensley, that we have always been 
confronted by that problem. You may recall the statistics I men¬ 
tioned, which showed that the unskilled laboring groups since 1910 


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have been reduced, in relation to the labor force, quite dramatically. 
You might ask the question, what has happened to those people ? They 
have moved, where possible, into higher skills; they moved perhaps 
into trade or service. 

You might also ask what became of all the servants that people 
used to have, when it was said they cannot do anything else ? They 
have moved into production jobs. It seems to me that the so-called 
unskilled worker will find a level, and our whole system of increasing 
basic education, and increasing training should be directed at employ¬ 
ing a person at the highest potential skill that he has. There will 
always be, I believe, room for persons to exercise their highest poten¬ 
tial skills, whether that be at the unskilled level or higher. 

Mr. Ensley. The younger people can through education and re¬ 
education develop skills, perhaps, but do you find from your studies 
that the older people—and by that I mean people 40, 45, or 50- 

Secretary Mitchell. I hope you would not say that was “elderly.” 

Mr. Ensley. Are there unique problems in connection with auto¬ 
mation that hits those particularly hard ? 

Secretary Mitchell. We haven’t found them so far in connection 
with this narrowly defined automation development, but we received 
last year money from Congress to conduct studies on the employment 
of the older worker. I believe that industry has tended to look upon 
a man over 45 as not too good a risk in initial employment. 

Our studies are going to be directed at comparable production rec¬ 
ords of older workers, or mature workers, at their absentee records, 
at the kind of jobs that they can do best, at the effects, if any, of pen¬ 
sion plans, the effects the pension plans may have on company policy 
with relation to the employment of the older people. We hope as a 
result of these studies to be able to present to industry some facts about 
the situation. 

The basis of our concern or study is not automation, but the fact 
that medical science has increased the life expectancy by some 18 years, 
I think, in the last quarter century. By 1970 or 1975 a sizable propor¬ 
tion of our available work force is going to be over 45. It seems to 
us in the Department of Labor that the present personnel hiring poli¬ 
cies need to he looked at again to make sure that that potential work 
force is not neglected. That is the basis for our study. 

Mr. Ensley. Will you release findings as a result of these studies 
soon? 

Secretary Mitchell. We expect to, within 1956 sometime. 

Mr. Ensley. Next year sometime? 

Secretary Mitchell. Yes, sir. 

Mr. Ensley. In easing the shock of technological development, you 
mentioned the important role of unemployment compensation. That 
is basically a State program, isn’t it? 

Secretary Mitchell. It is a Federal-State program; the determi¬ 
nation of the amount of weekly benefits and the duration of such bene¬ 
fits is a State responsibility. 

Mr. Ensley. Yes. 

And the States in the last year have made quite a number of im¬ 
provements, haven’t they, in terms of benefits? 

Secretary Mitchell. Yes. This spring I believe some 34 State 
legislatures acted, and in some form or another increased their bene¬ 
fits, or lengthened the duration of the benefits. 


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Mr. Ensley. I saw a memorandum recently that some staff mem¬ 
ber of your Department prepared, giving a very excellent rundown 
on the rather remarkable achievements this year. Do you believe 
however, that progress has been fast enough in light of the problems 
that may arise in the next 2 or 3 years in connection with automation 
and related matters? 

Secretary Mitchell. Well, the attention paid by the majority of the 
States this year is very encouraging. If they make the same kind of 
progress next year that they have made this year they will be a long 
way toward achieving the goal which President Eisenhower has set 
up, which is that the unemployment compensation benefits—public 
unemployment compensation benefits—equal at least 50 percent of 
the weekly wage for the great majority of claimants, which I think 
is an achievement goal. 

Mr. Ensley. Does your employment service help place engineers, 
skilled workers, and technicians? 

Secretary Mitchell. Yes, quite generally, Dr. Ensley. I believe 
that we could be more effective in that field if employers were to use 
the employment offices in the States to a greater extent than they do 
for this type of professional or semiprofessional job. Many of them 
are now turning to the employment offices, because of the shortages, 
and we could be of more service if more employees learned to use 
the employment offices. 

Mr. Ensley. I noticed in Los Angeles newspapers lengthy ads for 
skilled people, by New England companies. On the other hand I 
noticed in New England papers ads of California companies trying 
to entice engineers to California. I am wondering if the USES 
couldn’t be more useful in that regard ? 

Secretary Mitchell. We have the mechanism for interstate ex¬ 
change of information. An employer who places a requisition in New 
York City, for example, for a job classification that is short, has a 
right to expect that if there are people available in Ohio he can get 
them through the New York City employment office, because there 
is this interchange. 

Mr. Ensley. You have records as to the volume of such placement, 
do you? 

Secretary Mitchell. I believe we do. 

Mr. Ensley. I think in England they have a service, do they not, 
of vacancies by companies ? I suppose that wouldn’t be at all practical 
in this country, but it has been, I understand, a very useful service 
in England. 

Secretary Mitchell. In England, as I understand it, the public 
employment offices have more mandatory authority over the move¬ 
ments of workers. The American worker moves freely and he should 
always be permitted to move freely. 

Mr. Ensley. Another point that most all the witnesses have raised 
is that our rapid technological development will mean a shorter work¬ 
week. Could you make a forecast or prediction as to what the work¬ 
week might be, say a decade from now ? 

Secretary Mitchell. On the basis of our present studies, I would 
be very brash, I .think, to make any forecast as to what the workweek 
would be. I think it depends on the rate of technological change, and 
it also depends on our productivity needs. I mean, the need for na¬ 
tional production. 


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Certainly, we are going to meet the needs that the Nation has for 
the goods its uses. 

Mr. Ensley. And it becomes a value judgment as to whether you 
wish more products or more leisure, under our free-enterprise 
system ? 

Secretary Mitchell. And we have always, I think, made the right 
judgment. 

Mr. Ensley. But it would be in the direction, I would suspect, of 
a shorter workweek ? 

Secretary Mitchell. As I say, I think it is too early to say. I think 
that this will evolve through collective bargaining. While we have a 
standard 40-hour week, generally now, there are many companies in 
many industries that are working 36^ hours, 37^ hours, By agree¬ 
ment, I think it is an evolutionary thing, that collective bargaining 
will achieve. 

Mr. Ensley. One of the implications of automation is the im¬ 
portance of education. On pages 5 and 7 of your statement you stress 
the importance of training ana education. 

Do you know, or do you have any feeling as to whether or not our 
secondary and primary higher educational systems are keeping 
abreast with the demands of our technology? There is coming up 
shortly a White House Conference on Education. A great deal of 
preparation is going into that. Will the Department of Labor make 
a presentation which, among other things, touches on the need for 
training people, to conceive, man, and, operate these technical 
machines ? 

Secretary Mitchell. We have for many months, Mr. Ensley, been 
talking about this. As a matter of fact, we have a program in the 
Labor Department, directed to that very point. We are mainly con¬ 
cerned with assisting industry in its training problems in relation 
to the building up of skill, and the necessity for a larger percentage 
of skilled people in our work force. 

Undoubtedly, trainability in a company has a rather direct rela¬ 
tionship to basic education. There is no question about that. What 
we are dealing with now in industry are the defects, where they 
existed, of basic education, say, of 10 or 15 years ago, because you are 
dealing with people who are now in their twenties and thirties, and 
whatever defects or lacks they have is a result of basic education 
some 15 years ago. Certainly it goes without saying, in my opinion, 
that there is need for improvement of our basic educational system. 

Mr. Ensley. I was in West Virginia recently and I was told that 
many of the high-school teachers of mathematics and science have 
never taken science or math themselves, and that partially as a result 
of that, there are fewer and fewer students taking those subjects. 

This is something that gives us concern, particularly if we are going 
to develop technologically in the future. 

Secretary Mitchell. I might say on that point, Mr. Ensley j that in 
the armed services, where new skills and new techniques are being con¬ 
stantly required to service and operate new weapons, this problem of 
skills and training of soldiers is one of the most important ones the 
armed services have had to contend with. It is related, as we have 
found by investigation, to the basic schooling soldiers have when they 
come into the Army. 


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Mr. Ensley. I have 2 or 3 questions relating to the productivity or 
output per man-hour study that you s umm arized for us. As I under¬ 
stand, you will have the detailed study or report for inclusion in our 
record in the next 10 days or so ? 

(The information referred to appears at the end of Secretary 
Mitchell’s testimony.) 

Mr. Ensley. This, of course, is not the first time the Department of 
Labor has published a report on productivity, is it ? 

Mr. Claque. That is right. The Department used to conduct 
studies of this sort and publish indexes of this kind before the war. 
As a matter of fact, we published them during the war also on indi¬ 
vidual peacetime industries, for which the individual industry data 
were considered satisfactory. But that did not include the big war¬ 
time industries at all. It contained very few of the durable-goods 
industries. So those studies were interrupted by the war. This is 
the first resumption of an effort to get an overall index for the manu¬ 
facturing industries as a whole. 

Mr. Ensley. This, of course, has tremendously important implica¬ 
tions for industry and labor, and for economic forecasters. 

Could you tell us a little of the process that you went through in 
consulting with industry and labor people in the preparation of this 
report? 

Mr. Claque. Yes. We have, in the Bureau of Labor Statistics; a 
Labor Research Advisory Committee, and also a Business Research 
Advisory Committee, consisting of representatives of labor and busi¬ 
ness. Needless to say, they have been following this work very closely 
during the period we have been doing it, during the last 2 or 3 years, 
so that we have had a lot of consultation and advice in connection with 
it. Amd, of course, lots of questions have been raised about it. 

Mr. Ensley. By and large, though, they would see no objection to 
your agency preparing and publishing such data ? 

Mr. Claque. Some of our critics think these figures are not good 
enough to publish. You will see that we have used four different 
measures. One of the reasons is that any one measure has some defects 
in it. We thought by multiplying the ways of approaching the prob¬ 
lem we could, so to speak, get some notion of its general range. 

This is not a figure that is as refined or as accurate as the con¬ 
sumer price index., for example, where we present one single figure 
and where we certify to its accuracy down to a few tenths of a point, 
or less. This is a more difficult thing to measure, for one thing. Pro¬ 
ductivity is the result of a good many factors, and it is hard to meas¬ 
ure. So there are critics who say that these data are not as good as 
they might be, and they question whether they are worth while pre¬ 
senting on a par with our other data. 

Secretary Mitchell. I think it might be well to point out at this 
point, Dr. Ensley, that the inadequacies of the figures which Mr. 
Clague has been describing will be fully explained in the report which 
you get. 

Mr. Ensley. That will be very helpful, of course. 

I believe you indicated that the data come up through, including 
1953. 

Mr. Claque. Yes. 


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Mr. Ensley. Do you recall what the study shows for 1953? Does 
it show a leveling off of productivity in that year somewhat? 

Mr. Clague. Yes. But I think we have to be careful about pay¬ 
ing too much attention to any one lyear when we look at these figures, 
especially when we have a business downturn, followed by a business 
upturn, when we have a high level of employment and business pros¬ 
perity, followed by a period in which there is an increase in un¬ 
employment. 

Take an individual concern. It has the best results from a pro¬ 
ductivity point of view when it is using its machines at maximum 
capacity and has the right amount of labor to operate them. Gen¬ 
erally speaking, it is doing well from an efficiency point of view when 
it is at capacity utilization of its machinery. 

When you get a business downturn of some sort, however mild, it 
leads to some decline in production. They don’t lay off the workers 
in the same degree that they let the machines down. Some of the 
production workers that Dr. Moore mentioned may be laid off in 
considerable numbers, but not the basic accounting staff and people 
of that, sort, including repair and custodial labor. So the downturn 
in volume of production will have an adverse effect on the produc¬ 
tivity of the individual firm. 

However, the longer the production stays low, the more the com¬ 
pany adjusts to that situation: It does lay off more people. It does 
gradually reduce its work force. It doesn’t replace the people who 

S it. After about a year or so. or perhaps longer, you will find 
at the work force is down. Tnen when we get business recovery, 
production jumps quickly. But management doesn’t immediately 
rehire the repairmen and the other staff services. So there may be 
ups and downs in the productivity figures which reflect business ad¬ 
justing itself to business downturns and business recovery. 

Mr. Ensley. So that probably, while you do not have data avail¬ 
able for 1954, if you did nave it available, it would show productivity 
picking up again at the end of the year as economic recovery got 
underway. 

Mr. Clague. Yes. Remember that 1954 was a year of compara¬ 
tively low production, as compared to previous years. I wouldn’t 
think there would be so much of a change in productivity in that year, 
because of the situation I described above. The average wovld reflect 
declining business conditions. However, in 1955, we nad the typical 
business upturn from a moderate level of employment and produc¬ 
tion. Those are the times in which productivity would tend to show 
higher rates. Eventually, a little later on, the firms will have to hire 
all the additional staffs they need. 

Then there will be a leveling off again. 

Mr. Ensley. Will this study provide some kind of breakdown be¬ 
tween and among industries? 

Mr. Clague. We don’t plan in this study to show a break other 
than between durable goods as a whole—metal-goods industries and 
heavy industries—on the one hand, and soft-goods industries on the 
other. We have been publishing from time to time some few indi¬ 
vidual industry productivity data, but only where we are sure of the 
industry figures. 


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One of the weaknesses in the data is that the industries from census 
to census are not classified on a comparable basis. Therefore, some 
of the productivity figures on an industry-by-industry basis might 
be misleading. We won’t try to publish them until we confer with 
industry and labor in those industries. We might decide to do some 
individual industries later on, but not in this report. 

Mr. Enslet. Thank you very much. I might say, in connection 
with your productivity study, the chairman, Senator Douglas, has 
done a lot of work in the years gone by on this subject ana has ex¬ 
pressed to the staff several times the importance of this particular 
series, so he will be looking forward to your report with a great deal 
of interest. The material will be very helpful in our work. 

That is all, Mr. Chairman. 

The Chairman. Mr. Secretary, as a member of the President’s Cabi¬ 
net, I know you must be a very busy man. We, therefore, especially 
appreciate the fact that you were willing to give so much of your 
time and be patient with us in giving the benefit of your views to us. 
We appreciate it very much. 

Secretary Mitchell. I was very happy to do it. 

The Chairman. Thank you, sir. 

(The studies previously referred to follow:) 

STUDIES OF AUTOMATIC TECHNOLOGY 

No. 1 — A Case Study of a Company Manufacturing Electronic Equipment 

( October 1955) 1 

United States Department of Labor, James P. Mitchell, Secretary 

FOREWORD 

This report is the first of a series of studies on the application of automatic 
technology. This study describes the introduction of automatic production 
methods at a company manufacturing electronic equipment. It describes the 
nature of the changes, indicates some of its effects on employment, produc¬ 
tivity, and working conditions, and outlines some problems and methods of 
adjustment adopted by management and labor. Since only a single plant is 
covered the study is illustrative, rather than representative of the industry. 

Similar studies are planned covering such major developments as the elec¬ 
tronic computer, integrated machine processing, and automatic controls of 
operations. Some of the reports will contain, in addition to the detailed case 
study, some information on the extent of industry application of the specific 
type of automatic technology and on employment and related changes at plants 
producing new types of automatic equipment. 

This case study is based largely on information collected in June 1955 by 
members of the Bureau’s Division of Productivity and Technological Develop¬ 
ments through personal interviews with company and union officials and from 
descriptive information published by the company. Background information 
was obtained from other Bureau studies and technical publications.—Division 
of Productivity and Technological Development, Leon Greenberg, Chief. 

contents 

I. Introduction. 

II. Summary. 

III. Industry background. 

IV. Manufacturing operations at Y company. 

V. Development of automatic production at Y company. 

VI. Some implications for jobs and earnings. 

VII. Stake of the company and its workers in automatic production. 

* Prepared by Edgar Weinberg under the direction of K. G. Van Auken, Jr. 


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Appendices 

A. Labor turnover rates in radio and television industry, 1950-55. 

B. Employment in communication equipment and related products industries, 

1947-55. 

C. Description of some new jobs set up for automated production of electronics. 

D. Select annotated bibliography on automatic production of electronics. 

I. INTRODUCTION 

An important example of the general trend toward ipore automatic production 
processes is provided by the recent changes in methods of manufacturing elec¬ 
tronic equipment. The substitution of mechanical for hand labor in various as¬ 
sembling operations is likely to have an important impact on the number, skill, 
and wages of persons employed in this large and growing industry. Moreover, 
since the use of electronic devices is one of the main features of automation in 
both office and factory, changes in their manufacture have an impact far beyond 
the industry itself. 

This report describes the introduction of certain new automatic production 
techniques in the Y company, one of the first manufacturers of electronic equip¬ 
ment to use these techniques for commercial purposes, chiefly in radio and tele¬ 
vision sets. It is intended to give a factual account of the background and 
nature of the new methods, the process of change, and their implications for 
jobs and wages in one company. Although the history of these changes doubt¬ 
less varies from company to company, depending on economic conditions, union 
policies, and methods, this description of one case should be useful in suggesting 
the general character of developments that may occur at the plant level as the 
new methods are adopted elsewhere. 

This case study is not intended to assess the impact of automatic production 
methods on employment in the industry as a whole. But to enhance its value 
to the reader, some general background information on the characteristics, and 
some recent economic and technological experience of the industry is also pre¬ 
sented here. 

II. SUMMARY 

The experience of the company under study suggests the possibility of an 
orderly transition to automatic technology, within the framework of amicable 
union-management relations. This company is an expanding one in an expand¬ 
ing industry. It has apparently been able, through good planning and good tim¬ 
ing with respect to general economic conditions, to introduce new developments 
and resolve certain problems of worker adjustment with comparatively little 
hardship. 

Automatic production methods were developed gradually over several years 
as part of the company’s continuous efforts to raise productivity, to improve the 
quality of its products and to expand output and sales. Introduction of the new 
methods in favorable economic circumstances apparently avoided any displace¬ 
ment of workers. Some unskilled job opportunities were eliminated; certain 
new machine operations employing somewhat higher paid labor were created; 
and some additional jobs in skilled occupations were opened. Many hand labor 
jobs still remain. As the company pursues its program of expansion, rising out¬ 
put may eventually offset the effect of labor savings per unit on employment 
opportunities. 

in. industry background 

Automation of the manufacture of electronic equipment concerns an important 
and growing sector of the economy. An average of 490,000 employees, accord¬ 
ing to BLS employment statistics, were employed in 1954 in the communication- 
equipment industries, a broad group covering plants making not only radio and 
television, electronic tubes and related products, but also telephone and tele¬ 
graph, phonograph records and miscellaneous communication equipment. The 
radio, phonograph, television, and electronic tube branches comprise about S-5 
percent of this total. 

Employment characteristics 

About 2 out of 3 employees in the communication equipment industry group 
are located in the States of Illinois, New Jersey, Pennsylvania, New York, and 
Massachusetts, chiefly in the metropolitan centers. Women comprised 47 per- 


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cent of total employment in this industry group in December 1954, a much higher 
proportion than the 26 percent in manufacturing as a whole. Compared to the 
average for manufacturing, labor turnover is fairly high. A majority of elec¬ 
tronics workers are employed in relatively large plants; in October 1952, about 
67 percent worked in plants with 500 or more employees with only 9 percent in 
plants with less than 100 employees. 

A noteworthy feature of the industry is the wide seasonal variation in activity. 
Additional workers are hired in the fall as new models are introduced in prepara¬ 
tion for the winter season. Activity slackens in the spring and layoffs increase. 
(See appendix A, table I.) Employment in 1954 varied by 10 percent between 
November, the peak month, and April, the low month. 

Since the beginning of World War II, the communication equipment industry 
group has been expanded very substantially, though somewhat irregularly. The 
wartime employment peak, over 400,000 in 1944, was about 4 times the 1939 level. 
Employment declined to a postwar low of about 279,000 in 1949. (See appendix B, 
table II). Between 1949 and 1953, the postwar peak, employment virtually 
doubled in contrast with the rise of only 22 percent for manufacturing as a 
whole. Average employment in 1954 was about 12 percent lower than in 1953, 
but Btill somewhat larger than the 1952 employment level. Employment in the 
first half of 1955 was slightly higher than in the corresponding period in 1954. 

The most important factors in the trend of employment in recent years have 
•been the rapid growth of television production and the heavy purchases of mili¬ 
tary electronic equipment. Over 7 million television sets were produced in 1950, 
in contrast with only 179,000 in 1947. Production in 1954 was over 6 million 
sets. About 40 percent of the industry’s workers, in mid-1953, according to a 
BLS study of electronics labor force (Monthly Labor Review, October 1953) 
were engaged in defense work. This proportion has since been reduced. 

As employment and output were increased in the postwar period, manufac¬ 
turers reduced man-hour requirements, lowered prices, and improved the quality 
of their product. Direct man-hours required for the production of televison sets 
were reduced, for example, by about 20 percent between 1949 and 1950, accord¬ 
ing to a BLS study of plants in the industry (Trends in Man-Hours Expended 
Per Unit: Television and Radio Sets, 1949-50). Mass-production techniques 
found useful in radio manufacture—for example, greater specialization, simpli¬ 
fication of design, improved handling devices, and better plant layout—resulted 
in faster manufacturing operations. 

Business observers and students foresee continued long-term growth of elec¬ 
tronics goods production. Military, industrial, and consumer demand for com¬ 
munication and control equipment is expected to provide the basis for steady 
expansion. Of special significance for the industry’s future are the heavy ex¬ 
penditures for scientific research. According to a BLS survey (MLR October 
1953) “extensive research and development has been partially responsible for 
the rapid growth of this industry during the past few years, and is a necessary 
condition for its future growth.” 

Recent technological developments 

Traditionally, electronics manufacturing has largely involved the hand as¬ 
sembly of numerous wires and small parts. Mechanization of assembly pro¬ 
ceeded slowly because of difficulties in devising mechanisms to duplicate hand 
movements, for example, in cutting, twisting, spacing, and soldering a mass of 
wires into electronic circuits. The tremendous demand for output for military 
and civilian purposes is creating wide interest in faster methods of production. 

A major step toward reducing hand assembly work in this industry has been 

the complete redesign of electronic circuitry. Instead of connecting, lacing, and 
soldering wires together by hand, manufacturers are adopting various methods 
of mechanically printing or stamping circuits in the form of metallic (silver or 
copper) lines on flat boards made of glass, ceramic, or plastic. The complex three 
dimensional network of wires is thereby converted into a pattern on an easily 
handled flat surface. 

Simplification of assembly work was first introduced during World War II 
for various types of military equipment where space and weight had to be 
kept to a minimum. Within the last 5 years a number of manufacturers have 
substituted printed circuitry in place of conventional wiring in commercial radio 
and television receivers, hearing aids, control devices, and other electronic equip¬ 
ment. According to Fortune magazine (June 1955) printed